Gregory J. Farris - Page 10




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          Maine law as well.  See Moline Props., Inc. v. Commissioner,                
          319 U.S. 436 (1943) (holding that for Federal income tax                    
          purposes, a corporation and its shareholders are separate                   
          entities); see also LaBelle v. Crepeau, 593 A.2d 653, 655                   
          (Me. 1991) (likewise holding that under Maine law, a corporation            
          and its shareholders are separate entities).                                
               The 2000 lease cannot be considered merely a continuation of           
          the 1985 lease if only because the parties to those two lease are           
          not the same.  Consequently, the rental income petitioner                   
          received in accordance with the 2000 lease cannot be considered             
          to be from a written binding contract entered into before                   
          February 19, 1988.  It follows that the transitional rule set               
          forth in section 1.469-11(c)(1)(ii), Income Tax Regs., is not               
          applicable.  It also follows that the recharacterization rule               
          provided in section 1.469-2(f)(6), Income Tax Regs., requires               
          that the rental income petitioner received from the corporation             
          cannot be treated as passive income with the meaning of section             
          469.                                                                        
               To reflect the foregoing,                                              

                                             Decision will be entered                 
                                        for respondent.                               











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