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petitioner reported a $227,061 gain from this sale. The parties
agree that petitioner miscalculated the gain from the disposition
of the property, and the amount in the notice of deficiency is
correct. Petitioner, however, now contends that Olympic was the
true owner of this property, and the gain from the sale of the
equipment should be reported by Olympic and not petitioner.
Petitioner’s contention, however, is wholly unsupported in
the record. At trial, Mr. Bone, petitioner’s 51-percent owner,
in response to the question of who owned the equipment, replied
that petitioner owned it. Petitioner also failed to present any
evidence regarding the agreement between petitioner and Olympic
with respect to the equipment under consideration. Consistent
with respondent’s determination and petitioner’s reporting of the
transaction is the fact that Olympic’s 1991 and 1992 tax returns
included $125,816 and $146,847, respectively, in equipment lease
deductions. Olympic’s reporting of lease payments supports our
holding here that the arrangement between petitioner and Olympic
was a lease. Accordingly, respondent’s determination regarding
the gain on the sale of equipment is sustained.
Overstatement of Inventory
Findings of Fact
Petitioner listed its 1991 ending inventory as $30,602.
Petitioner listed its 1992 beginning inventory as $91,668. The
difference is attributable to Olympic’s 1992 discontinuation of
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