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The record indicates that Olympic made $190,415.89 in
payments to petitioner during the fiscal year ending March 31,
1992. Only $64,839, however, was reported as rental proceeds on
petitioner’s 1992 income tax return. Petitioner has failed to
show that the deposits in question from Olympic were loan
repayments rather than rental payments. Accordingly,
respondent’s determination regarding the unreported rental income
of $62,7896 for the 1992 tax year is sustained.
Sale vs. Lease
Findings of Fact
During the years at issue, petitioner entered into lease
arrangements under which various parties were permitted the use
of petitioner’s concrete pumping equipment. Each of these
arrangements required monthly payments to petitioner for a
specific period of as little as 36 months to as long as 60
months, depending upon the arrangement. Under the agreements,
the “lessee” bore the burden of all expenses for necessary
repairs, maintenance, operation, and replacements required to be
made to maintain the equipment in good condition. The “lessee”
was also required to maintain insurance on the equipment. Each
6 At trial, respondent asserted that a $125,577 adjustment
for a rental income understatement could have been determined.
Respondent, however, determined that only 50 percent of the
$125,577 difference would be rental income and the remaining 50
percent loan repayment. Respondent’s determination was
apparently based on some prior agreement or understanding with
petitioner.
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