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Hall would have been during petitioners’ 1997 tax year other than
unsupported assertions that the rent payable under the lease was
less than fair market rent.
The allocation in the lease under which ATV purported to
lease 95 percent of the Landmark Hall property from Mr. Cutts for
its business use was in accordance, petitioners asserted, with an
allocation that had been arrived at and approved in the audits of
prior years’ returns by the Internal Revenue Service (IRS).
We decide this issue on the facts in the record regarding
use of Landmark Hall during the 1997 tax year at issue. Although
respondent’s revenue agents, in prior year audits, may have
allocated Mr. Cutts a lesser percentage of Landmark Hall for
personal use than respondent determined for the 1997 tax year, we
do not find the prior year audits relevant or persuasive to show
how Landmark Hall was actually used during the 1997 tax year. We
disregard the results of the prior year audits in their entirety.
We assume the allocation of ATV’s $78,000 rent payments between
rent and dividends has no tax consequence to Mr. Cutts for his
1997 tax year.
There is an ambiguity or oversight in the statutory notice
that we did not discover until after the briefing schedule had
been completed. If, as the lease provides, the $78,000 annual
rent was paid for the use of 95 percent of Landmark Hall, then
ATV and Mr. Cutts necessarily assumed and agreed the rental value
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