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property leased by petitioner is used for offices. Much of it is
used for production and storage. It also includes a residence.
Vissotzky only evaluated leases under which the landlord
pays for insurance, maintenance, real estate taxes, and other
similar costs. Petitioner admits that it paid insurance,
maintenance, and utilities. Thus, Vissotzky's comparables are
not like petitioner's facilities.
Vissotzky’s fair rental value estimate includes the value
added to the property by the $1 million petitioner spent to
improve it. We agree with Pietka's view that it is unreasonable
to expect a tenant to pay for the rental value of improvements
that the tenant made.
6. Petitioner's Claim That It Had Business Reasons for
Paying More Rent to Mr. Cummings Than He Paid to the
Red Cross
Petitioner contends that it had substantial business reasons
for paying more rent to Mr. Cummings than Mr. Cummings paid to
the American Red Cross, unlike the taxpayers in Utter-McKinley
Mortuaries v. Commissioner, 225 F.2d 870 (9th Cir. 1944), and
Mark R. Switz, Inc. v. Commissioner, T.C. Memo. 1979-162.
Petitioner contends that it had a business purpose in having a
month-to-month rental instead of a 12-year lease. Mr. Cummings
testified that a 12-year obligation on petitioner’s balance sheet
would give petitioner a poor debt to equity ratio and hurt
petitioner's banking relationships. We are not convinced that
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