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shareholder. Following Wysong Corp.'s incorporation, Wysong
Medical was dedicated to research and development activities
consisting of developing food supplements for animals and people,
designing medical and surgical equipment, and designing athletic
and fitness equipment. Except for filling a few invoice orders
carried over from 1991, beginning in January 1992, Wysong Medical
performed strictly research and development activities during the
years in issue. Its sole client was Wysong Corp.
Petitioners instigated a series of transactions in order to
shift liabilities and assets away from Wysong Medical to Wysong
Corp. On January 1, 1992, petitioners leased the Eastman
Building and the underlying property to Wysong Corp. for a period
of 10 years. Both petitioners signed the lease agreement as
lessors, and Dr. Wysong signed as lessee in his capacity as
president of Wysong Corp. Under the terms of the lease
agreement, Wysong Corp. was obligated to pay petitioners monthly
rent of $9,085, $4,800 per month to Dr. Wysong, and $4,285 per
month to Julie Wysong, for an annual total of $109,020. During
1992 and 1993, Wysong Corp. paid petitioners rent in the amounts
of $132,842 and $131,520, respectively.2
On December 31, 1991, prior to Wysong Corp.'s finalizing its
lease agreement with petitioners, Wysong Corp. leased space in
2 The record does not disclose the reason for the disparity
in the rent provided by the lease agreement and the rent actually
paid by Wysong Corp.
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Last modified: May 25, 2011