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expensive to clean up. In the mid-1980s, government regulators
in California imposed strict new regulations on operators of
underground storage tanks, requiring the use of double-wall
tanks, double-wall piping, tank-monitoring devices, and leakage
alarms. Government regulators also require annual testing of the
systems to prevent or minimize soil, groundwater, and air
pollution. Petitioner spent $60,000 to clean up a leak at its
Roseville Road site and has incurred expenses of more than
$500,000 to clean up contamination at its Placerville plant.
Petitioner paid and deducted the following amounts as rent
during 1996 and 1997 with respect to its cardlock locations:
Property 1996 1997
Watt Avenue $120,000 $120,000
Mosquito Road 55,200 53,400
Roseville Road 48,000 54,000
White Rock Road 54,000 55,500
Mother Lode Drive 27,600 28,800
Fee Drive -- 116,000
Total 304,800 327,700
1The Fee Drive property was leased for only
4 months in 1997, at a rent of $4,000 per
month.
The annual fair market rental value for both 1996 and 1997
of Watt Avenue was $89,700 and of Mother Lode Drive was $29,900.
The fair market rental value of Fee Drive for the 4 months of
1997 (during which the property was leased to petitioner) was
$10,400. Respondent offered no evidence to contradict
petitioner’s and petitioner’s experts’ testimony that petitioner
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