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to show how the lease rents were determined, citing Duplicating
Supply Co. v. Commissioner, T.C. Memo. 1993-451.
In Duplicating Supply, the Court recognized that the
taxpayer had the burden of establishing that it was not negligent
in setting the rent for the property, as the Commissioner had
determined in the notice of deficiency. The taxpayer had
substantially overstated rent (charging for 1 year’s rent 44
percent of the fair market value of the property), had made no
investigation of the market before setting the rent, and offered
no explanation to show how the rental figure had been determined.
The case at hand is easily distinguished from Duplicating
Supply. The uncontradicted evidence indicates that petitioner
made efforts to determine the correct rents by contacting real
estate agents before setting the rents. Petitioner’s president
and shareholder, Randall Dean Hunt, testified that before
entering into each of the leases, he (or his father before him)
asked several different brokers whether the rental rate was
reasonable.
Respondent argues that even though Mr. Hunt named the
brokers he and his father spoke with, Mr. Hunt’s testimony was
self-serving and should be disregarded because petitioner did not
call the brokers as witnesses. Respondent asks us to disregard
Mr. Hunt’s testimony because it is self-serving and
uncorroborated by any independent witnesses, citing Wichita
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