Chamber of Commerce v. Commissioner
United States Tax Court
Petitioner, an organization exempt from tax under section 101(7), I.R.C. 1939, leased its building to Pyramid. The lease itself was for a term of 46 months and gave the lessee the right to make any improvements it chose.
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Petitioner, an organization exempt from tax under section 101(7), I.R.C. 1939, leased its building to Pyramid. The lease itself was for a term of 46 months and gave the lessee the right to make any improvements it chose. Under an "Escape and Penalty Clause Agreement" executed 3 days after the lease, the lessee could ask for a 59-month renewal at the end of the original lease and if the lessor refused, lessor thereby became obligated to pay for all the lessee's improvements at 100 per cent of their original cost. The lessee intended to and did make extensive improvements immediately upon…
1Opinion of the Court
Forrester, Judge:
Respondent has determined a deficiency of $956.72 in the income tax of petitioner for the fiscal year ending February 28, 1954, by taxing certain rent as “unrelated business net income.” The parties are agreed tbat the sole issue for our determination is whether a so-called Escape and Penalty Clause Agreement executed 8 days after the lease constituted an option for renewal or extension within the terms of section 428, I.B.C. 1939.
BINDINGS OP PACT.
Some of the facts have been stipulated and are so found.
Petitioner, an organization exempt from taxation under section 101 (7) ,1…
2Cases cited2 opinions
- Eimer & Amend v. CommissionerUnited States Board of Tax Appeals · 1925
- Sylvan Mortgage Co. v. AstruckAppellate Division of the Supreme Court of the State of New York · 1923
3Cited by3 opinions
- Rowley United Pension Fund v. CommissionerUnited States Tax Court · 1975
- Chamber of Commerce v. CommissionerUnited States Tax Court · 1961
- Rowley United Pension Fund v. CommissionerUnited States Tax Court · 1975