Opinion · United States Tax Court

Young Motor Co. v. Commissioner

32 T.C. 1336

Type
Opinion
Court
United States Tax Court
Jurisdiction
Federal
Date
1959-09-30
Topic
bankruptcy

OPINION. Opper, Judge: The burden of proving absence of the ultimate corporate activity1 prohibited by section 102 is concededly imposed upon petitioner. See Pelton Steel Casting Co., 28 T.C. 153, affd. (C.A. 7) 251 F. 2d 278, certiorari denied 356 U.S. 958. Assuming in its favor that the evidentiary element of business need has not been rebutted by respondent because of the statement furnished by petitioner, see section 534, I.R.C. 1954, as amended by sections 4 and 5 of Pub.

Citator

UpLaw has not yet analyzed Young Motor Co. v. Commissioner. The absence of a flag is not a finding that it is good law.

Cited by
4 opinions
YOUNG MOTOR CO. v. COMMISSIONER OF INTERNAL REVENUE,32 T.C. 1336(1959)
YOUNG MOTOR COMPANY, INC., PETITIONER, v. COMMISSIONER OF INTERNAL
REVENUE, RESPONDENT.
Docket No. 62101.
United States Tax Court.
Filed September 30, 1959.
Petitioner,held,on the facts, not to have borne the burden of proving error in respondent's determination that petitioner was availed of to prevent the imposition of surtax upon its shareholders by permitting earnings or profits to accumulate instead of being divided or distributed.
Charles V. Ryan, Esq.,for the petitioner.John J. O'Toole, Esq.,for the respondent.
Respondent determined deficiencies in petitioner's income tax of $15,791.88, $10,605.70, and $4,960.90 for the calendar years 1950, 1951, and 1952, respectively. The only issue is whether petitioner is subject to tax under section 102, I.R.C. 1939, as having been availed of during the taxable years to prevent the imposition of the surtax upon its shareholders by permitting earnings or profits to accumulate instead of being divided or distributed.
FINDINGS OF FACT.
The stipulated facts are found.

Petitioner is a Massachusetts corporation with its principal place of business in Springfield, Massachusetts. Petitioner keeps its books of account and prepares its returns on an accrual method of accounting and on the calendar year basis. It filed its returns for the years 1950 through 1952 with the collector or director of internal revenue for the district of Massachusetts.

In 1919 Harry W. Young, hereafter called Young, commenced operations in an automobile business as a sole proprietor. At first Young serviced automobiles and sold used Ford automobiles. InPage 13371927 he became a distributor of Oldsmobiles for General Motors Corporation. In 1929 Young formed petitioner.

From 1929 through October 31, 1954, petitioner held a distributor's franchise from General Motors for the sale of new Oldsmobile automobiles. The term was from November 1 of one year through October 31 of the following year. On the latter date either party could terminate by refusal to renew the franchise.

Since its organization petitioner has been in the business of buying, selling, and servicing new and used automobiles. From 1929 through 1954, petitioner engaged in the allied business of financing for its customers automobiles sold at retail.

Petitioner was authorized to issue 2,500 shares of common stock. During the controversial years Young and his wife jointly owned 2,453 shares and served as petitioner's treasurer and president, respectively. At all material times Young controlled petitioner's policies and operations. Charles L. Frank, petitioner's vice president, owned the remaining 47 shares.

In 1938 Young formed F. J. Maloney, Inc., hereafter called Maloney. Maloney engaged in the automobile business in Worcester, Massachusetts. After World War II commenced Maloney moved to Springfield where it purchased properties of a mercantile nature. From 1950 through 1952, the principal business of Maloney was the rental of mercantile properties.

In 1945 Young acquired Plant Properties, Inc., hereafter called Plant, which then owned an apartment building with 28 apartments. From 1950 through 1952, Plant owned and rented approximately 20 properties.

From 1950 through 1952, Young and his wife owned over 99 per cent of the stock in Maloney, Plant, and Holly Realty, Inc. During the same period Young operated, as a sole proprietorship, the Victor Realty Company, hereafter called Victor. Victor owned approximately 60 properties.

From 1945 through 1952, petitioner made loans to the Maloney and Plant corporations and to Young, personally, and for Victor. They were evidenced by demand notes, and, except for a loan to Victor, were secured by no collateral. Beginning in 1952, the stated interest was 3 per cent. Prior to 1952 there had been no provision for interest. The respective debtors used these loans to pay operating expenses.

Petitioner purchased securities through the office of a broker, who was one of its customers, as follows:
Year of Name of security Cost purchase

1947 .... Canadian Pacific .............................. $7,594.13 1948 .... Sinclair Oil .................................. 2,811.71 1951 .... Panhandle Oil ................................. 9,140.32
Page 1338

Petitioner had no immediate need for the money invested in these securities. None of these securities were sold as of December 31, 1952.

From 1945 through 1952, Young on his own behalf and on behalf of Maloney and Plant repaid some of these loans.

Petitioner's balance sheet as of December 31, 1941, reflected the following assets, liabilities, and net worth (in even dollars):Assets
Cash .......................... $500 Accounts receivable — other .. 27,965 Accounts receivable — trade .. 5,131 Notes receivable — trade ..... 115,529 Inventories ................... 25,598 Fixed assets .................. 3,186 Deferred charges .............. 643 ------- Total ..................... 178,554
Liabilities and net worth
Bank loan .................... $27,500 Accounts payable — trade .... 3,809 Accounts payable — other .... 16,838 Accounts payable — officer .. 48,623 Notes for new cars ........... 13,450 Reserve accounts ............. 438 Notes ...................... 9,157 Finance .................... 19,043 Net worth .................... 39,713 ------- Total .................... 178,554


The item designated as "Accounts Payable — Officer $48,623" represented unpaid wages earned by Young from 1930 through 1941.

Petitioner's balance sheets as of December 31, 1949, 1950, 1951, and 1952 reflected the following assets, liabilities, and owners' equity consisting of capital and surplus (in even dollars):
1949 1950 1951 1952Assets

Cash .......................... $26,243 $78,051 $65,994 $72,998 Accounts receivable — trade .. 5,551 4,277 4,322 8,707 Notes receivable — trade ..... 87,728 93,927 72,763 62,679 Accounts receivable: F. J. Maloney, Inc. ......... 36,943 39,143 39,143 39,143 H. W. Young ................. 48,857 48,014 48,944 47,937 Plant properties ............ 15,000 17,069 17,069 Exchange — H. W. Young ....... 27,931 33,575 65,071 72,983 Mortgages receivable — Victor Realty ...................... 12,477 12,477 12,477 12,477 Mortgages receivable — others ................... 34,575 27,644 28,221 27,447 U.S. bonds .................... 75 75 75 75 Securities .................... 10,405 10,405 19,546 19,546 Inventories ................... 44,581 49,767 65,431 50,664 Deferred charges .............. 2,693 4,348 3,645 2,548 Fixed assets .................. 4,460 4,477 6,125 6,177 -------- ------- ------- ------- Total assets .............. 342,526 421,187 448,833 440,456 ======== ======= ======= =======Liabilities and owners' equity

Accounts payable — trade and customer credit: Balances .................... 2,995 11,290 9,008 5,834 Accounts payable — H. W. Young ................. 29,623 29,623 29,623 29,623 Service greasing contracts .... 1,867 3,504 4,100 4,029 Deferred discounts on mortgages ................... 4,039 3,072 2,983 2,500 Reserve for bad debts ......... 1,205 548 1,326 3,649 Reserve for notes receivable .. 9,157 9,157 9,157 9,157 Reserve for taxes ............. 27,777 41,221 33,890 12,325 Reserve for depreciation ...... 2,214 2,613 3,202 3,752 Reserve for finance ........... 19,023 19,023 19,023 19,023 Reserve for used and repossessed cars ............ 5,510 5,510 5,510 5,510 Capital stock — common ....... 22,174 22,174 22,174 22,174 Earned surplus ................ 216,938 273,446 308,833 322,875 -------- ------- ------- ------- Total liabilities and owners' equity .......... 342,526 421,187 448,833 440,456
Page 1339

From 1949 through 1952, petitioner's net sales, operating expenses, net income, net income after taxes, dividends paid, earned surplus, and assets unrelated to its business were (in even dollars):
1949 1950 1951 1952

Net sales ......................... $719,601 $860,272 $713,061 $503,214 Operating expenses ................ 88,170 98,522 88,617 82,821 Net income ........................ 55,819 87,952 63,775 23,177 Net income after taxes ............ 34,672 55,262 37,402 16,374 Dividends paid .................... ________ ________ ________ ________ Earned surplus .................... 216,938 273,446 308,833 322,875 Assets unrelated to its business .. 171,266 186,336 230,550 236,680
From 1929 through 1952, Young leased to petitioner the land and building at 510 Main Street and a nearby parcel of land used for storage purposes at a rental of approximately $350 to $375 per month. In 1950 or 1952, Young increased the rent to $750 per month. The original building consisted of 1,500 square feet. Young enlarged the premises at 510 Main Street by constructing a 3,000 square foot building in 1930 and a 4,000 square foot building in 1937. Both buildings were adjacent to the original building. Except for some minor improvements made in 1950, the premises occupied by petitioner in 1937 remained the same up to and during the years in issue. The showroom and service station were adjacent to the public sidewalk, there were no private parking facilities and the garage was too small for the longer and wider automobiles produced since 1946.

In 1945 a representative of General Motors visited petitioner and reminded it that at some future time petitioner would have to be housed in better physical facilities. In 1948 General Motors threatened to cancel petitioner's franchise if petitioner's facilities did not improve. Later in the same year petitioner retained an architect to draw a sketch of a proposed building 150 feet long and 80 feet deep at a construction cost of approximately $150,000. The architect submitted a blueprint on September 12, 1948.

On November 20, 1948, the City of Springfield auctioned a 2-acre parcel of land. Young considered that this land would be ideal for petitioner because of its strategic location, topography, and size. Young had attended the auction and unsuccessfully bid as high as $99,500. The final bid was $100,000. Shortly thereafter Young offered the purchaser $115,000 for the land.

In 1951 and 1952 Young looked for another parcel of land upon which a building could be constructed for petitioner.

From 1948 through 1952, petitioner discussed with General Motors its plans for expansion. General Motors determined that petitioner's plans did not meet its specifications.

From 1950 through 1952 there was a shortage of cement, steel, and other construction material. During the same period General MotorsPage 1340did not fill all of petitioner's orders for new automobiles. It had placed on allocation the number of automobiles available to each of its distributors for resale.

The terms and conditions of the Direct Dealer Selling Agreement between petitioner and General Motors provided in part:

[Section 12] * * * [Petitioner] will maintain a place of business including salesroom, service station, parts and accessories facilities and used car facilities satisfactory to * * * [General Motors].

[Section 25(B)(2)] If * * * [petitioner] does not develop the sale of Oldsmobile motor vehicles and chassis to the satisfaction of * * * [General Motors] or does not conduct * * * [its] business in accordance with any requirement set forth in * * * [section 12], * * * [General Motors] may terminate this Agreement by giving to * * * [petitioner] written notice of termination to be effective three (3) months after receipt of such notice.

On December 17, 1952, petitioner wrote General Motors as follows:

[I]t becomes apparent that the plans for providing facilities which will meet Oldsmobile's requirements for the Springfield market, which have been the subject of planning and discussion with you since 1945, should be implemented.

In Mr. H. R. Lee's letter, dated November 19, 1948, he outlined some initial steps to be taken in the overall plan for providing adequate facilities and since that time, as you know, we have discussed the question of when to start the construction of these facilities.

[I]t appears that this construction should start when Oldsmobile's production [of new cars] warrants same.

[W]e would apreciate having your current thinking on the physical facilities required to handle the projected Oldsmobile volume in our market.

On December 22, 1952, General Motors answered petitioned as follows:

As you know, the problem of obtaining adequate facilities for your dealership has been a matter of discussion since you were first contacted by Mr. F. Q. Murphy on September 1, 1945. Specific recommendations regarding facilities were subsequently made in Mr. H. R. Lee's letter dated Nov. 19, 1948, and in our Space Record and Analysis prepared on July 13, 1951.

However, because of the recent changes in contemplated Oldsmobile volume, we are in the process of preparing new studies regarding the space and facilities for all dealerships and we shall be very glad to prepare yours among the first. It will take approximately 30 days before we will be in a position to give you our considered recommendations regarding specific requirements.

We agree with you that the present production outlook seems to solve at last the question of the proper time to commence this construction and we are pleased to note that you agree that the time is nearly at hand.

On August 18, 1953, General Motors wrote the following letter to petitioner:

In our letter of December 22 we advised that a space study was in process and it would be approximately thirty days before we would be able to furnish you withrecommendations regardingthese requirements. However, this was somewhat delayed, but has now been completed and reveals the followingrequirements ascompared to your present facilities:Page 1341
Present Set-upRequired No.Stalls No. Stalls

Show Room ................................. 4 4 Customer Reception ........................ 2 8 Production Customer Service ............... 11 23 Paint and Body Shop ....................... 0 4 Internal Labor ............................ 4 4
These space requirements are based on coverages computed from your present rate of sales for the first seven months of 1953, based on National Average requirements of thirty hours per year maintenance by the average owner.

Inasmuch as this is an average figure, we feel that we are justified in requesting that you provide these facilities which must be considered minimum requirements. It should also be noted that the appearance of your showroom is not comparable to the new modern showrooms now provided in Springfield by competitors. A modernization of your showroom would certainly be necessary if your dealership is to be considered equal to Oldsmobile standards.

On November 2, 1953, General Motors renewed petitioner's franchise for the period November 2, 1953, through October 31, 1954. At that time General Motors requested petitioner to sign a modification agreement whereby petitioner would "acquire and occupy" satisfactory premises no later than July 1, 1954. Petitioner refused to sign this agreement. In a letter dated November 2, 1953, General Motors wrote petitioner:

[I]t is our present intention not to offer you a new * * * [agreement next year, unless] on or before October 31, 1954, you are able to affirm your good faith and intention to provide satisfactory facilities that will properly preserve and maintain the good will attached to the name "Oldsmobile" and "Oldsmobile" trade marks by furnishing us with evidence that construction of new facilities is under way.

[A]ny commitment which may be made by you or any liability which may be incurred by you with respect to the acquisition of satisfactory premises shall impose no liability or obligation upon Oldsmobile Division [of General Motors].

In the latter part of 1953 or in 1954, petitioner refused to comply with General Motors' requirements. It estimated that the cost of purchasing land and constructing such a building, with new equipment, would exceed $500,000. It also determined that its past, current, and future business would not warrant such an expenditure.

On October 31, 1954, General Motors refused to renew petitioner's franchise.

During 1956 and part of 1957, petitioner sought to secure a franchise from other automobile manufacturers. In July 1957 it acquired from Ford Motor Company, hereafter called Ford, the franchise for the sale of Edsel automobiles. Ford required petitioner to maintain a working capital of $400,000. In August 1957, Maloney, Plant, and Young used cash on hand and loans from a bank to repay most of their loans to petitioner. Petitioner used these funds to meet Ford's requirements.Page 1342

In its early years of business petitioner borrowed money at high rates of interest. These interest charges absorbed most of its earnings.

In 1940 and 1941, petitioner financed approximately 50 per cent of the automobiles it sold. In August of 1940 and 1941, it had invested in finance paper the respective amounts of $84,851.92 and $130,729.28. Petitioner borrowed money from a bank in order to maintain a part of this finance business. These loans as of December 31, 1941, December 31, 1943, and December 31, 1944, were $27,500, $20,000, and $25,000, respectively.

In 1946 and 1947, petitioner's customers paid a large amount of cash toward the purchase of automobiles. In 1949 credit unions and banks competed against petitioner in the business of financing automobiles for petitioner's customers. In 1952 petitioner financed approximately 15 to 20 per cent of the automobiles it sold.

In 1941 and 1942, and from 1945 through 1952, the number of new and used automobiles sold by petitioner were:
Year New Used Total automobiles automobiles

1940 ...........11384 1941 ...........11557 1945 ........... 160 160 1946 ........... 66 116 182 1947 ........... 106 232 338 1948 ........... 91 179 270 1949 ........... 151 169 320 1950 ........... 214 271 485 1951 ........... 155 202 357 1952 ........... 97 127 224
In the 1940 and 1941 period, the average retail prices for new and used automobiles were approximately $1,050 and $450 to $500, respectively. During the years in issue the average retail prices for new and used automobiles were approximately $3,200 and $1,400, respectively, and the average downpayment by a purchaser was one-third of the purchase price.

From 1950 through May 7, 1952, all automobile financing was under Federal Reserve Board requirements.

From 1950 through 1952, General Motors based the percentage of automobiles its distributors could purchase on new automobile control production less new dealerships opened and new marketing areas opened by population.

During the years in issue the trading population of Springfield was approximately 350,000. Petitioner was one of two Oldsmobile distributors in Springfield.

Young and his wife would have had to pay additional taxes for the years 1950, 1951, and 1952 in the respective amounts of $33,363.76, $24,117.84, and $10,788.92 if petitioner had distributed to them their share of its net income after taxes.Page 1343

Since its organization petitioner has not declared or paid dividends. Since 1941 it has not paid any salaries to its officers or directors.

During the years in issue Maloney, Plant, and Holly Realty, Inc., did not pay salaries to Young.

On January 20, 1956, respondent notified petitioner, pursuant to section 534, I.R.C. 1954, that he proposed to issue a statutory notice of deficiency for the years 1950 through 1952 with respect to section 102, I.R.C. 1939. On February 15, 1956, petitioner sent respondent a statement of the grounds relied upon to establish that all or any part of its earnings had not been permitted to accumulate beyond the reasonable needs of the business. On February 21, 1956, respondent mailed a deficiency notice to petitioner for the years 1950 through 1952. It provided in part:

It has been determined that for * * * [each of the years 1950, 1951, and 1952] your earnings and profits have been permitted to accumulate (instead of being divided and distributed as dividends among your shareholders) beyond the reasonable needs of your business for the purpose of preventing the imposition of surtax on your shareholders. Therefore, your tax liability * * * includes the surtax imposed by Section 102.

Petitioner was availed of during 1950, 1951, and 1952 to prevent the imposition of the surtax upon its shareholders by permitting earnings or profits to accumulate instead of being distributed.
OPINION.
OPPER,Judge:
The burden of proving absence of the ultimate corporate activity1prohibited by section 102 is concededly imposed upon petitioner. SeePelton Steel Casting Co.,28 T.C. 153, affd. (C.A. 7)251 F.2d 278, certiorari denied356 U.S. 958. Assuming in its favor that the evidentiary element of business need has not been rebutted by respondent because of the statement furnished by petitioner, see section 534, I.R.C. 1954, as amended by sections 4 and 5 of Pub.L. No. 367, 84th Cong., 1st Sess. (1955), that factor then merely becomes neutral.

An understandable confusion, seeCaseyv.Commissioner,(C.A. 2)267 F.2d 26, reversing T.C. Memo. 1957-226, exists betweenPage 1344proof of "unreasonable accumulation"2which, if present, is prima facie evidence of the prohibited purpose under section 102, I.R.C. 1939; and proof of absence of the condemned purpose, which does not follow automatically from affirmative proof of business need.3There is nothing in section 102, either before or after the 1955 amendment, which makes the entire case turn on the unreasonableness of the accumulation as related to business needs. These are two separate questions.4SeeF. E.Watkins Motor Co.,31 T.C. 288,297,300. Had there never been a reference in the Code to reasonable needs of the business, respondent's determination that a corporation's earnings were accumulated for the purposes described in section 102 would still be presumptively correct. If there is no proof by respondent of the unreasonableness of the accumulation as regards business needs and there is no other evidence, petitioner must still fail because the burden of proof of facts sufficient to show the error of respondent's determination is basically upon it as in all comparable proceedings.

Thus, the statute may be found not to apply in some cases where the accumulations are unreasonable * * * or, conversely, may be held to apply [even] where they are reasonable * * *. Hence, reasonableness or unreasonableness of an accumulation may constitute a factor in arriving at the ultimate determination, but the statutory prohibition may apply irrespective thereof whenever the proscribed purpose appears. * * *

Though intent is a state of mind, it is nevertheless a fact to be proved and found as are other facts. * * * Of course, the corporation's intent will be considered to be that of those responsible for its acts. * * * In this regard, while the testimony of petitioner's officers and shareholders is entitled to some weight, the issue is to be resolved in the light of all of the surrounding circumstances,including, of course, theinterests of those in control, and their actual conduct. * * * [Pelton Steel Casting Co.,28 T.C. 153,173-174, affd. (C.A. 7)251 F.2d 278, certiorari denied356 U.S. 958. Emphasis added.]

There can be no question that petitioner was availed of here to prevent imposition of the surtax upon its shareholders which would have occurred had the earnings been distributed. Our findings make it clear that many thousands of dollars would have been due from them as income taxes if the current earnings had been distributed. This, however, is no more than a preliminary requisite. The statute also calls for the existence of the inhibited purpose.

If this purpose exists it may be accompanied by other legitimate business objectives and still the statute will apply.Helveringv.Stock Yards Co.,318 U.S. 693;WhitneyChain Mfg. Co.,3 T.C. 1109,Page 13451119, 1120, affd. (C.A. 2)149 F.2d 936. While it is always difficult to determine the state of a person's mind, and perhaps more especially that of a corporation, we think, on the present record, any corporate intent must be attributable purely to its guiding hand, Young, and that petitioner has failed to carry its burden of showing that one of the purposes of maintaining its relatively large corporate surplus was not to prevent the imposition of surtax upon Young and his wife by means of accumulating its earnings.

There is in fact no testimony anywhere in the record that this was not one of petitioner's purposes.5Nor is there, as inBreitfeller Sales, Inc.,28 T.C. 1164, any formal action of the board of directors stating a purpose of any kind for the accumulations. It is not unreasonable to assume that petitioner's controlling stockholder would expect and intend the corporate action to have its inevitable result of freeing the stockholders income from tax by reason of the failure to distribute.

But in addition to the failure to rebut the presumption of correctness, there is affirmative evidence to support the determination. SeeHelveringv.Nat. Grocery Co.,304 U.S. 282;Helveringv.Stock Yards Co., supra. No dividends have ever been paid by petitioner over its 20-odd-year history. Most of the accumulated surplus was loaned to the principal stockholder or his controlled but unrelated businesses. Nearly all the loans were without security, and all, as petitioner states in its brief, "were non-interest bearing in the period in question." The stockholder not only permitted the dividends to accumulate but even failed to draw large amounts of salary. And although petitioner occupied property owned by the stockholder, there is evidence that the rent collected was unduly low in the years before us.6

On the entire evidence, both affirmative and negative, we accordingly conclude that respondent correctly determined the deficiency under section 102, I.R.C. 1939.Decision will be entered for the respondent.Page 1346
  1. Not shown by the record. ↩
  2. SEC. 102. SURTAX ON CORPORATIONS IMPROPERLY ACCUMULATING SURPLUS.

    (a) IMPOSITION OF TAX. — There shall be levied, collected, and paid for each taxable year (in addition to other taxes imposed by this chapter) upon the net income of every corporation * * * if such corporation, however created or organized, is formed or availed of for the purpose of preventing the imposition of the surtax upon its shareholders or the shareholders of any other corporation, through the medium of permitting earnings or profits to accumulate instead of being divided or distributed, a surtax * * *

    * * * * * * *

    (c) EVIDENCE DETERMINATIVE OF PURPOSE. — The fact that the earnings or profits of a corporation are permitted to accumulate beyond the reasonable needs of the business shall be determinative of the purpose to avoid surtax upon shareholders unless the corporation by the clear preponderance of the evidence shall prove to the contrary. ↩
  3. This includes the consequence of the 1955 amendment which places upon respondent the burden of proof that the accumulation was not beyond the reasonable needs of the business where petitioner has submitted an adequate statement. ↩
  4. For provisions applicable to 1954 and subsequent years, see, e.g., section 535. ↩
  5. Of course, the case may be tried on the theory that the reasonable business needs issue is dispositive.BreitfellerSales, Inc.,28 T.C. 1164,1169. But that was not so here. ↩
  6. "They denied that the matter of surtax avoidance by the shareholders was ever discussed, or that the possibility of such avoidance was ever a consideration in determining the disposition of the company's earnings. These denials remain unshaken by cross-examination. Of course, such denials are not entirely controlling. Perhaps they are to be expected,forwithout them there would be no controversy." (Cecil B. Demille,31 B.T.A. 1161,1175, affd. (C.A. 9)90 F.2d 12, certiorari denied302 U.S. 713. Emphasis added.) ↩
  7. "Q. Well now, do I understand, then that in effect what you were getting from the petitioner [as rent] was actually about what it cost you to run the property?

    "A. That's right.

    "Q. So that, if you had put it up to the petitioner to make these payments, it really would have turned out that you weren't getting any rent either?

    "A. I wasn't getting any profit on the rent, let's put it that way.

    "Q. So, in addition to your salary, and in addition to not getting dividends, you were really not getting any rent?

    "A. That's right." (Tr., pp. 127-128.) ↩