- 12 -
1992 or 1993, it would have increased the Eastman Building's
total asset cost in 1993.
We also reject petitioners' second argument that the rent
was reasonable because the parties intended for Wysong Medical to
reimburse Wysong Corp. for additional equipment and services
provided by the latter. Assuming that there was in fact a
legitimate business purpose for the sale of Wysong Medical's
assets to Wysong Corp., and that the transaction may be
recognized for tax purposes, Southeastern Canteen Co. v.
Commissioner, 410 F.2d 619; Carroll v. Commissioner, T.C. Memo.
1978-173, Wysong Medical's other deductions are inconsistent with
petitioners' argument. If the rent established by the 1992 and
1993 lease agreements included a premium for the use of
equipment, then why did Wysong Medical take a $9,000 deduction in
1992 for equipment rental? Petitioners offered no explanation.
Also, in 1992 and 1993, Wysong Medical deducted $7,913 and
$3,680, respectively, for utilities expenses paid. Jill Hubbard
(Ms. Hubbard), who began working for Wysong Medical in 1986 and
continued on with Wysong Corp. in the capacity of office manager
and bookkeeper, testified that Wysong Medical paid $7,913 to
Wysong Corp. to reimburse the latter for a percentage of the
utilities bills it paid. Again, petitioners failed to explain
why Wysong Medical made separate payments to reimburse Wysong
Corp. for utilities payments made on Wysong Medical's behalf if
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