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Petitioner told both the revenue agent and respondent’s
counsel that Air America paid him rent for the use of space in
the Lincoln Avenue I property. Air America maintained its office
at property owned by petitioner and deducted $12,425 for rent
expenses. The record contains no proof that Air America paid
anyone other than petitioner for rent expenses. As far as the
record reflects, Air America did not have branch offices. The NA
Tours companies were separate entities from Air America.
We do not agree with petitioner that the corporate
workpapers in evidence show that he did not receive rental income
from Air America. Those documents were records of IL NA Tours,
not Air America. Moreover, in arguing for the receipt into
evidence of these workpapers, petitioner stressed that these
documents did not constitute all of the books and records for IL
NA Tours and were merely workpapers accumulated by Chung to
assist him in the preparation of IL NA Tours’ tax returns. Chung
did not testify that those documents constituted all of the
workpapers Chung gathered for that purpose. Furthermore,
petitioner’s counsel never asked Chung at trial whether Air
America paid rental income to petitioner during 1988. The normal
inference is that testimony on that matter would have been
unfavorable to petitioner’s position. See Frierdich v.
Commissioner, 925 F.2d at 185; Tokarski v. Commissioner, 87 T.C.
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