Harry E. Peaden, Jr. v. Commissioner

113 T.C. No. 6

UNITED STATES TAX COURT HARRY E. PEADEN, JR. AND CINDY D. PEADEN, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 14837-97. Filed August 9, 1999. C, P's wholly owned S corporation, leased trucks under master lease agreements (master leases). For each truck, C and the lessor agreed to a base rent dependent on the lessor's cost of the truck. The master leases contain a terminal rental adjustment clause (TRAC), as defined in sec. 7701(h)(3), I.R.C., providing that the lessor, at the conclusion of the lease term, must sell the truck and remit to C any sale…