Randy L. and Julie J. Wysong - Page 16

                                       - 16 -                                         

          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.                          







Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  

Last modified: May 25, 2011