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agreement acknowledged that the rental price was less than
prevailing market rentals for the same or similar equipment. In
consideration of this factor, Aeternum was required, at its sole
expense, to store any nonrental equipment owned by Cilena in a
safe and suitable manner for the remainder of the equipment
lease. The lease agreement did not require Cilena to operate,
maintain, or render any services with respect to the rental
equipment. The lease agreement provided that Aeternum owed
Cilena for past due expenses in the amount of $5,189 for rent and
$9,818 for other expenses and that such debts had to be repaid
before petitioner and Mr. Cotter could withdraw any profits from
Aeternum. Aeternum was the sole lessee of the equipment and
never paid any of the rent due to Cilena under the equipment
leasing agreement.
For the period 1990 through April of 1993, Aeternum served
between 20 and 30 customers and incurred losses of approximately
$10,000. Neither petitioner nor Mr. Cotter reported his share of
this loss. By early 1993, Aeternum was approximately $21,000
delinquent on the rental payments due under the facilities lease
with the third party. No business was conducted by Aeternum
after April of 1993, and at that time the facilities lease still
had 3 years remaining and approximately $150,000 in future rental
payments.
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Last modified: May 25, 2011