Peerless Weighing & Vending Machine Corp. v. Commissioner
United States Tax Court
Petitioner paid and accrued about $ 26,000 in 1963 in order to accelerate the termination of a lease (which was to expire in 1970) so that petitioner could demolish an existing building and put the property to a more profitable use.
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Petitioner paid and accrued about $ 26,000 in 1963 in order to accelerate the termination of a lease (which was to expire in 1970) so that petitioner could demolish an existing building and put the property to a more profitable use. The lease was successfully terminated at the end of 1963 and demolition commenced on Jan. 3, 1964. Held: Petitioner is not entitled to deduct the $ 26,000 in 1963 as a business expense under sec. 162 of the Internal Revenue Code of 1954. The expenditure was for a capital asset (the unexpired term of the lease) which had a definite life beginning after the year…
1Opinion of the Court
OPINION
The only issue for decision herein is whether the expenditures incurred in canceling the lease of Home Arts is an ordinary and necessary expense for the year 1963 under section 1623 of the Internal Revenue Code.
As a general rule, amounts paid by a lessor to a lessee for the cancellation of a lease prior to its expiration date have been held to be capital expenditures, amortizable over the unexpired term of the canceled lease. Henry B. Miller, 10 B.T.A. 383 (1928); Harriet B. Borland, 27 B.T.A. 538 (1933); Laurene Walker Berger, 7 T.C. 1339 (1946); Bernard A. Rosenblatt, 8 T.C. 1245…
2Cases cited5 opinions
- Miller v. CommissionerUnited States Board of Tax Appeals · 1928
- Heller Trust v. CommissionerUnited States Tax Court · 1946
- Trustee Corp. v. CommissionerUnited States Tax Court · 1964
- Wells Fargo Bank & Union Trust Co. v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1947
- Rosenblatt v. CommissionerUnited States Tax Court · 1947
3Cited by6 opinions
- In Re Federated Department Stores, Inc.United States Bankruptcy Court, S.D. Ohio · 1992
- Rodeway Inns of America v. CommissionerUnited States Tax Court · 1974
- United States v. Federated Department Stores, Inc. (In Re Federated Department Stores, Inc.)District Court, S.D. Ohio · 1994
- Boucher v. CommissionerUnited States Tax Court · 1981
- Peerless Weighing & Vending Machine Corp. v. CommissionerUnited States Tax Court · 1969
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