Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years before
the Court, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
The issues for decision are: (1) The fair market rental
value of the property leased by petitioner from its president and
sole shareholder, (2) whether some further adjustment to
petitioner's gross receipts is required, and (3) whether
petitioner is liable for the addition to tax for negligence under
section 6653(a) for the taxable year 1989 and for the penalty for
negligence under section 6662 for the taxable year 1990.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits attached thereto are
incorporated herein by this reference.
Petitioner was located in Pleasant Garden, North Carolina,
at the time it filed its petition in this case. Petitioner is in
the business of selling, installing, and maintaining boilers,
boiler parts, and supplies. The business began in 1985 and was
incorporated on September 11, 1987. Luther Ray Berry (Berry) is
petitioner's president and 100-percent shareholder.
On March 23, 1989, Berry organized a new corporation,
Southern Boiler Sales and Service No. 2, Inc. (No. 2), to expand
into the business of installing and maintaining pipes. Berry
owned 100 percent of this corporation as well. However, the
expansion did not materialize, and the business and activity of
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