- 4 -
was unable to lease or purchase equipment on credit. Financial
institutions simply would not make any loan of any type to
Highland. Highland’s continued existence depended on its
obtaining equipment. Faced with this predicament, petitioner and
his brother separately purchased the necessary equipment in their
individual names and separately leased it to Highland. There is
no dispute that petitioner and his brother were engaged in an
equipment leasing activity amounting to a trade or business
during the year in issue, and the record clearly supports that
characterization. Respondent has not raised any questions as to
whether the leasing activity was for profit, and we treat that
matter as conceded by respondent. Petitioner and his brother
each owned 100 percent of the equipment that he leased to
Highland; none of the equipment was jointly owned. They leased
the equipment exclusively to Highland. It was never used in
another trade or business. Petitioners had no written rental
agreement with Highland. During 1996, Highland did not pay
petitioners any rent.
During 1995, Highland paid rent of $69,600 and $40,091 to
petitioners and Don Blewett, respectively. During 1996, Highland
paid rent of $56,263 to Don Blewett and no rent to petitioners.
At trial, petitioner testified that because of Highland’s poor
financial condition, its rental payments to the Blewetts were
irregular. In his words, “you pluck all the feathers off of that
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011