Mills v. Commissioner
United States Tax Court
The taxpayer, a textile producer, acquired new mill machinery under agreements called leases whereby it was required to make fixed monthly payments called rentals to the machinery manufacturers for about five years and could then acquire title to the machinery by payment of a relatively small additional amount.
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The taxpayer, a textile producer, acquired new mill machinery under agreements called leases whereby it was required to make fixed monthly payments called rentals to the machinery manufacturers for about five years and could then acquire title to the machinery by payment of a relatively small additional amount. As set forth in correspondence, the totals payable in monthly installments were computed to include 5 or 6 per cent interest on the "principal," and interest tables were attached to the manufacturers' letters explanatory of the terms of the agreements. Held: (1) The monthly amounts…
1Opinion of the Court
OPINION.
Johnson, Judge:(1) Did the Commissioner err in disallowing the deduction of $30,786.78 claimed by petitioner as rentals paid for the use of machinery in its business ?
The Commissioner’s disallowance was based on the ground that the petitioner, through these payments, acquired an equity in the property. Section 23 (a) (1) (A) of the Internal Revenue Code, pertaining to deductions of expenses in a trade or business, authorizes deductions for rent in this language:
* * * and rentals or other payments required to be. made as a condition to the continued use or possession, for purposes of…
2Cases cited3 opinions
- Gilken Corp. v. CommissionerUnited States Tax Court · 1948
- Halsey v. Minnesota-South Carolina Land & Timber Co.Supreme Court of South Carolina · 1934
- Woodrow v. FrederickSupreme Court of South Carolina · 1926
3Cited by74 opinions
- Estate of Thomas v. CommissionerUnited States Tax Court · 1985
- Walburga Oesterreich v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1955
- Haggard v. CommissionerUnited States Tax Court · 1955
- Benton v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1952
- Bowen v. CommissionerUnited States Tax Court · 1949
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