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4.9 percent of Wysong Corp.'s gross income. In comparison, in
1992 and 1993, Wysong Medical had gross income in the amounts of
$147,341 and $100,537, respectively, and paid rent to Wysong
Corp. in the amounts of $92,087 and $46,000. Wysong Medical's
rent payments were approximately 49.7 percent and 45.8 percent of
its gross income. We also note that petitioners made no attempt
to determine the fair rental value of the property prior to
Wysong Medical and Wysong Corp.'s entering into the lease
agreements; petitioners did not consult with a real estate
appraiser to determine fair rental rates in the area, and they
did not investigate the rental rates of comparable properties.
In conclusion, we find that Wysong Medical's rent
payments were excessive for purposes of section 162(a)(3).
Accordingly, we sustain respondent's determination on this issue.
The excess rent payments do not constitute rent that Wysong
Medical was required to pay for the continued use and possession
of the property in question, for purposes of its trade or
business, and are therefore not deductible.
We have considered all other arguments made by the parties
and found them to be either irrelevant or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.
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