Montgomery Co. v. Commissioner

OPINION

On the first issue we think the respondent’s determination should be sustained.

Generally an amount paid by a lessor to a lessee for cancellation of a lease prior to the expiration of its term is a capital expenditure made in order to obtain possession of the premises and is deductible over the unexpired term of the canceled lease. Trustee Corporation, 42 T.C. 482 (1964), and the cases cited at page 488. But there is a well-established exception to the general rule. Business Real Estate Trust of Boston, 25 B.T.A. 191 (1932); Keiler v. United States, 285 F. Supp. 520 (W.D. Ky. 1966),…