Lucian T. Baldwin, III - Page 19

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          other companies each time the Sabre was used.  From 1989 through            
          and including 1992, BAC billed one of petitioner’s companies for            
          each person transported, using a per capita rate established by             
          BAC’s president after consultation with petitioner.9  The per               
          capita rate used to prepare the invoices was increased in 1989,             
          1990, and 1991 in an effort to reduce BAC’s substantial operating           
               BAC claimed depreciation on the Sabre, which was titled in             
          BAC’s name, and on a Cessna, which was not titled in BAC’s                  
          name.10  Petitioner acquired the Cessna ostensibly so that he               
          could obtain his pilot’s license and eventually fly the Sabre.              
               During the years at issue, BAC did not offer the Sabre for             
          charter by third parties, nor did it lease the Sabre to a third             
          party; BAC used the Sabre to provide transportation exclusively             
          to petitioners, their family, and invited guests.                           

               9After November 1990, BAC did not include passenger names              
          other than petitioner’s in the aircraft utilization reports and             
          trip recaps maintained by BAC.  In addition, BAC did not maintain           
          any records regarding the nature of the trips taken on its                  
               10Record title to the Cessna was apparently held by a                  
          separate corporation, Lucian Aircraft Co., which insured the                
          Cessna until 1991.  Petitioner’s accountant testified that BAC              
          claimed depreciation on the Cessna because BAC should have owned            
          the Cessna.  Certain records in evidence show that the Cessna was           
          rented on three occasions during 1990 by people who were or had             
          been employed as BAC’s pilots.                                              

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