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carpeting. The credits are described in the statements as
reimbursements for carpet costs. In addition, Peter responded as
follows to his attorney's question at trial:
Q The scheduled rent -- monthly rent payments that
were scheduled under the lease -- you reached an
agreement with them that the scheduled rent payments
would be reduced or eliminated until they recouped back
the cost that they laid out for the carpet?
A That's -- in essence, that's correct.
Notwithstanding the foregoing, petitioners argue that the
amounts incurred by Blockbuster provided no economic benefit to
REE and TNE and therefore do not constitute gross income to REE
and TNE because Blockbuster is the owner of the carpeting
pursuant to oral agreements.
Peter's self-serving testimony on this matter was indefinite
and corroborated only by a letter, dated 2 years after the
carpeting was installed, from a Blockbuster representative who
stated that "to the best of [his] actual knowledge" that
Blockbuster owns the carpeting in its video stores. The letter
does not refer to REE, TNE, or the oral agreements under which
petitioners argue that Blockbuster claims ownership of carpeting.
This letter has little, if any, probative value with respect to
REE's and TNE's cases.
Under the circumstances of these cases, we find that the
carpeting constitutes improvements to the real properties owned
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