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The income received for editing services for Fair Game and
Moll Flanders, personal holding company income, constitutes 74
percent of petitioner’s adjusted ordinary gross income in the
1996 taxable year. The income received for editing services
for Kazaam, The Associate, Breakdown, and Moll Flanders,
personal holding company income, amounts to 76 percent of
petitioner’s adjusted ordinary gross income for 1997.
For the 1996 and 1997 tax years, petitioner’s ledgers
indicate it received rental income in the amounts of $24,400
and $68,100 respectively. Respondent determined that these
amounts constitute personal holding company income as defined
in section 542(a)(2). Respondent’s determination is entitled
to a presumption of correctness; petitioner bears the burden of
proof to establish the determination is in error. See Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Petitioner advances no meaningful argument on brief that
respondent’s determination is erroneous. We therefore find
that the rental income in the years in issue is personal
holding company income.
We hold that petitioner is a personal holding company, as
defined in section 542, for the 1996 and 1997 taxable years.
As a consequence, petitioner is liable for personal holding
company tax, imposed by section 541, equal to 39.6 percent of
the undistributed personal holding company income for each of
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