- 36 -
between a controlling shareholder and a third party followed by a
sublease by the controlling shareholder to the taxpayer
corporation for substantially more rent. In W.H. Braum Family
Partnership v. Commissioner, supra, the Braum family owned the
properties that they leased to the taxpayer corporation. We
found that the rent was not excessive.
7. Conclusion
Petitioner has not shown that Mr. Cummings did not pay fair
rental value to the American Red Cross and has shown little or no
business purpose to increase the rent. The facts of this case
are similar to those in Utter-McKinley Mortuaries v.
Commissioner, supra, and Mark R. Switz, Inc. v. Commissioner,
supra, and the reasoning of those cases applies here.
To account for the points described above in pars. B-4, B-5,
and B-6, we accept Pietka's conclusion of the fair rental value.
We conclude that the petitioner may deduct rental payments of
$120,087, $124,896, and $129,891 for fiscal years 1989, 1990, and
1991, respectively.
To reflect concessions and the foregoing,
Decision will be entered
under Rule 155.
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