Wy'East Color, Inc. An Oregon Corporation - Page 35

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          petitioner's banking relationships would have been hurt if                  
          petitioner had signed a 12-year lease.  For each of the years in            
          issue, petitioner had retained earnings of from $1 million to $2            
          million.                                                                    
               Petitioner contends that it paid more rent to Mr. Cummings             
          than Mr. Cummings paid to the Red Cross because petitioner had a            
          month-to-month lease instead of a 12-year lease.  Mr. Cummings              
          also testified that binding petitioner to one location for 12               
          years would hurt its ability to grow and move.  We believe that             
          petitioner overstates the value of having a month-to-month lease,           
          especially considering that petitioner had spent $1 million to              
          adapt the property to its own needs.                                        
               Petitioner contends that a business reason for renting from            
          Mr. Cummings is that it could pay rent late if necessary.                   
          However, petitioner had no right to pay rent late.  Petitioner in           
          fact paid rent on time.  Petitioner's claim that Mr. Cummings               
          might give it a break is entirely speculative.                              
               The points cited by petitioner are far outweighed by the               
          fact that it paid rent of $730,000 for the 3 years in issue                 
          instead of the $293,925 Mr. Cummings paid to the American Red               
          Cross.                                                                      
               Petitioner contends that W.H. Braum Family Partnership v.              
          Commissioner, T.C. Memo. 1993-434, is strikingly similar to the             
          instant case.  We disagree.  That case did not involve a lease              





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