- 10 - and Kessler involved maintaining and servicing equipment, AGI provided extensive services.7 Only one case has previously determined that the services provided were extraordinary. Welch v. Commissioner, T.C. Memo. 1998-310. Welch involved personal service contracts in which the taxpayer, a carpenter, contracted with movie production companies to construct movie sets. The taxpayer also leased tools and equipment to the production companies. The Court found that the movie company’s primary motivation was to obtain the taxpayer’s services and not to lease his equipment. Id. Similarly, we find that AGI’s attorney-tenants leased from AGI primarily to obtain its legal support services and not to lease its office space. The regulations provide examples regarding when the extraordinary personal services exception might apply. Two examples concern the use by patients of a hospital’s boarding facilities and the use by students of a boarding school’s dormitories.8 See sec. 1.469-1T(e)(3)(v), Temporary Income Tax Regs., supra at 5702. In each, the use of the premises was 7Further, the Court in Hairston v. Commissioner, T.C. Memo. 2000-386, stated that no credible evidence supported taxpayers’ contention that extraordinary services were performed. The Court found, rather, that the taxpayers individually had “little or no responsibility” for maintaining the equipment under the lease, and that the taxpayers merely “serviced and maintained” equipment they rented. In contrast, the record supports petitioners’ contention that petitioner wife was continuously engaged in providing extensive legal support services. 8Additional examples in the regulations address the extraordinary personal services exception in the context of leasing photographic equipment, leasing tractor trailers, and leasing a taxi. See sec. 1.469-1T(e)(3)(viii), Examples (1), (3), (9), Temporary Income Tax Regs., supra at 5703-5704. We do not find these examples analogous to our facts.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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