Douglas Properties, Inc. v. Commissioner
United States Board of Tax Appeals
The petitioner acquired by assignment, at a cost of $110,000 with an agreement to pay a fixed rental, the unexpired terms of two leases on real property and thereafter during the same year conveyed the whole of the unexpired terms of the leases for a consideration of $50,000 and an increased annual rental. Held: (1) That the latter conveyances were not assignments or contracts of sale but created the relation of landlord and tenant between the parties thereto.
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The petitioner acquired by assignment, at a cost of $110,000 with an agreement to pay a fixed rental, the unexpired terms of two leases on real property and thereafter during the same year conveyed the whole of the unexpired terms of the leases for a consideration of $50,000 and an increased annual rental. Held: (1) That the latter conveyances were not assignments or contracts of sale but created the relation of landlord and tenant between the parties thereto. (2) That the amount received by petitioner on the execution of the instruments is taxable income and not a return of capital.
1Opinion of the Court
*349OPINION.
ARUndell :
The decision of the question raised herein turns upon whether the agreements entered into on March 21, 1925, between the petitioner and the Flagler Street Co. are assignments or contracts of sale of the leasehold interests of the former in the properties, as contended by it, or subleases as the respondent concluded. The conveyances having transferred to the Flagler Street Co. all of petitioner’s leasehold estate in the properties for the remainder of the terms of the leases, leaving no reversion in the transferor, undoubtedly created assignment of the terms as between the…
2Cases cited12 opinions
- Stewart v. . Long Island R.R. Co.New York Court of Appeals · 1886
- Bedford v. . TerhuneNew York Court of Appeals · 1864
- Woodhull v. . RosenthalNew York Court of Appeals · 1875
- Davis v. . MorrisNew York Court of Appeals · 1867
- Garrison v. . Vermont MillsSupreme Court of North Carolina · 1910
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3Cited by2 opinions
- Douglas Properties, Inc. v. CommissionerUnited States Board of Tax Appeals · 1930
- William Penn Hotel Co. v. CommissionerUnited States Board of Tax Appeals · 1931