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earned interest income during 1988 totaling $27,992. Petitioner
reported the $27,992 in interest as income on his 1988 return.
The $27,992 interest income remained in the ANB accounts during
1988. Petitioner obtained backup withholding credits in 1989,
1990, and 1991 with respect to the ANB accounts.
Depreciation and Rental Income Issues
During 1988, petitioner, through a land trust, owned real
property at 5528 N. Lincoln Avenue, Chicago, Illinois (Lincoln
Avenue I property) and at 5524-5526 N. Lincoln Avenue (Lincoln
Avenue II property) (collectively, the Lincoln Avenue
properties). Petitioner was the sole owner of the Lincoln Avenue
properties.
During 1987 and 1988, the offices of Air America and IL NA
Tours were located on the first and second floors, respectively,
of the Lincoln Avenue I property. After 1988, Air America
occupied the entire Lincoln Avenue I property. On its 1987
return, IL NA Tours claimed a deduction of $37,810 for rent
expense in the “Other deductions” category of expenses. Air
America did not deduct rent expense on its 1987 return other than
a deduction for equipment rent. On their 1988 returns, Air
America reported rent expense of $12,425 in the “Other
deductions” (line 26) category of expenses, and IL NA Tours
reported rent expense of $41,127 in the “Other deductions”
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