- 14 - property. Among other things, petitioners argue that the reasonableness of Wysong Medical's rent is evidenced by the proportionally similar income and losses reported by both the lessor and the lessee. For example, in 1992, Wysong Medical's total deductions represented approximately 101 percent of its gross income, whereas Wysong Corp.'s total deductions represented approximately 99 percent of its gross income. Petitioners contend that this balancing of income and losses was done by design, and that this proportionality establishes that there was no improper shifting of income. Respondent argues that Wysong Medical's payments were not reasonable in light of all the facts and circumstances. First, and using the square footage identified in the lease agreements, respondent argues that parties in an arm's-length transaction would not have agreed to rent office space at $184 per square foot when the prevailing rate in the area was $13 per square foot. Second, respondent argues that the amount of rent paid by Wysong Medical was not reasonable in relation to the business activities of the two corporations. In 1992 and 1993, Wysong Medical's gross receipts were $147,341 and $100,537, respectively; whereas Wysong Corp.'s gross receipts were $2,436,888 and $2,666,759 in 1992 and 1993, respectively. Yet, the amount of rent paid by Wysong Medical represented 69 percent and 35 percent of the total rent paid by Wysong Corp. in 1992 andPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
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