Randy L. and Julie J. Wysong - Page 15

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          1993, respectively.  According to respondent, it was not                    
          reasonable for Wysong Medical to pay such portions of the rent.             
          Third, respondent argues that Wysong Medical's payments to Wysong           
          Corp. were made as a means of shifting income with the end effect           
          being a decrease in the amount of flow-through income from Wysong           
          Medical, an S corporation, to its sole shareholder Dr. Wysong.              
               We are not satisfied that the amount of rent paid by Wysong            
          Medical was reasonable, in other words, that a lessee in an                 
          arm's-length transaction with an unrelated party would have paid            
          the amount of rent that Wysong Medical was required to pay under            
          the lease agreements.  We reject petitioners' argument that the             
          corporations' proportionally similar income and losses for the              
          years in issue demonstrates that there was no improper shifting             
          of income and that the amount of rent paid by Wysong Medical was            
          reasonable.  We believe that the relevant inquiry focuses not               
          only on the effect that these deductions had on the two                     
          corporations but also on the effect that the deductions had on              
          the S corporation's sole shareholder, Dr. Wysong.                           
               Furthermore, we find that Wysong Medical's rent payments               
          were not reasonable in relation to the corporations' business               
          activities.  In 1992 and 1993, Wysong Corp. had gross income in             
          the amounts of $2,436,888 and $2,666,759, respectively, and made            
          rent payments to petitioners in the amounts of $132,842 and                 
          $131,520.  The rent payments were approximately 5.5 percent and             





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