Petitioners, Emil and Emily Panichi, are sole stockholders of Watch Hill Holding Corp. (Watch Hill). Emil Panichi also operates a sole proprietorship under the name Royal Carting Co. (Royal). For the storage of trucks and the use of office space Royal paid rental to Watch Hill in the amount of $30,000 annually for the years 1972 and 1973 and $34,000 for the year 1974. Royal also paid Watch Hill a management fee
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