Vitamin Village, Inc. - Page 10

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          Reeves’s property by a rundown gangway.  The houseboat, the dock,           
          and the gangway were in a poor and dangerous condition.                     
               In petitioner’s FYE June 30, 1995, Mr. Reeves and petitioner           
          entered into a lease agreement for $1,000 a month to provide                
          petitioner with access from Mr. Reeves’s residence to the                   
          houseboat and the dock, the use of his utilities, and the use of            
          his parking lot, boat, and jet skis for advertising and                     
          promotional purposes.9   In the fiscal years at issue, petitioner           
          also rented the first floor of Mr. Reeves’s residence for $700 a            
          month to store goods.                                                       
               In 1995, Mr. Reeves and petitioner removed the dilapidated             
          houseboat and the dock and hired a contractor to build a new                
          houseboat, a 100-foot dock, and a floating garage (floating                 
          structures).  Construction of the floating structures was                   
          completed in the spring of 1996, and they were placed into                  
          service on May 28, 1996.10  The Oregon State Marine Board listed            
          petitioner as the owner and Mr. Reeves as the coowner.11                    

               9 The $1,000 a month also allowed access to Mr. Reeves’s               
          tennis court and an enclosed area where corporate guests could              
          place their children so they would be safe from falling into the            
          Willamette River.                                                           
               10 Petitioner’s Form 4562, Depreciation and Amortization,              
          reported the property was placed into service on May 28, 1996.              
               11 Mr. Reeves claimed that only petitioner owned the                   
          floating structures and he was listed as a coowner because the              
          State required an individual contact.                                       

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Last modified: November 10, 2007