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In evaluating a leasing arrangement between a taxpayer and
his wholly owned corporation, we must consider not only the lease
itself, but also the testimony of witnesses and the surrounding
circumstances. Cf. Stinnett v. Commissioner, 54 T.C. 221, 233
(1970) (explaining that many factors are reviewed by a court in
determining if a lease is for a specified or indefinite term).
Petitioner testified that the premises were purchased solely with
the intent of leasing a portion to Goshorn. We find it probative
that Goshorn did lease these premises for many years, up until
the time it was forced out of business for financial reasons.
Further, the nature of the improvements indicates that they were
made for the long-term benefit of Goshorn's business. Given the
testimony and the surrounding circumstances, we believe peti-
tioner intended that the leasing arrangement with Goshorn would
continue for an extended duration.
The facts herein are more in the mode of Bardes v. Commis-
sioner, 37 T.C. 1134 (1962). The taxpayer in Bardes leased real
property to his closely held corporation, and that corporation
constructed a building costing $848,184 on the taxpayer's land.
Id. at 1141. We held that the improvements made by the corpora-
tion did not result in dividend income to the taxpayer. Id. at
1149.
Like the taxpayer in Bardes, petitioner here has leased the
land to his wholly owned corporation under commercially reason-
able terms. The rent was established at an amount commensurate
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