- 103 -
On the basis of Chung’s corroborating testimony, we are
persuaded that the rental expenses IL NA Tours claimed on its
corporate return did not relate to payments made to petitioner.
Thus, we hold that petitioner did not have unreported rental
income of $41,127 from IL NA Tours in 1988.56
The rationale we apply to decide whether IL NA Tours paid
petitioner $41,127 in rental income during 1988 does not apply,
however, to the $12,425 deducted by Air America for rental
expense in 1988. Other than petitioner’s self-serving retraction
of his statements to the revenue agent and respondent’s counsel,
there is no proof that petitioner did not receive the $12,425 he
admitted receiving from Air America for use of space in the
Lincoln Avenue I property. Petitioner’s arguments relating to
the cash disbursement spreadsheets and to the checks he submitted
to respondent’s counsel are not persuasive as to rental payments
made by Air America since those spreadsheet notations and checks
apply only to IL NA Tours. Presumably, Air America maintained
its own books and records since it was a separate entity from IL
NA Tours.
56 The propriety of IL NA Tours’ deduction of rental
payments for the benefit of other corporations owned by
petitioner is not before the Court and, therefore, we do not
address the question of whether the payments to the third-party
rental agents would have been a deductible expense of IL NA
Tours.
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