Montgomery Co. v. Commissioner
United States Tax Court
1. Held, a certain lease cancellation payment of $ 10,000 in 1962 was made solely for the purpose of acquiring a new, more lucrative lease from a new tenant, the TraveLodge Corp.; consequently, the payment should be amortized over the life of the new TraveLodge lease. 2. Held, petitioner's earnings and profits for the taxable years 1962 through 1964 were not permitted to accumulate beyond the reasonable needs of petitioner's motel venture business including the reasonably…
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1. Held, a certain lease cancellation payment of $ 10,000 in 1962 was made solely for the purpose of acquiring a new, more lucrative lease from a new tenant, the TraveLodge Corp.; consequently, the payment should be amortized over the life of the new TraveLodge lease. 2. Held, petitioner's earnings and profits for the taxable years 1962 through 1964 were not permitted to accumulate beyond the reasonable needs of petitioner's motel venture business including the reasonably anticipated needs of such business. Held, further, in view of the credit provided for in sec. 535(c)(1) of the 1954 Code,…
1Opinion of the Court
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),…
2Cases cited26 opinions
- Helvering v. TaylorSupreme Court of the United States · 1935
- The Smoot Sand & Gravel Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Fourth Circuit · 1960
- United Business Corporation v. Commissioner of Int. Rev.Court of Appeals for the Second Circuit · 1933
- Faber Cement Block Co. v. CommissionerUnited States Tax Court · 1968
- John P. Scripps Newspapers v. CommissionerUnited States Tax Court · 1965
21 more not listed; retrieve them via the Exa API.
3Cited by11 opinions
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- EMI Corp. v. CommissionerUnited States Tax Court · 1985
- Rhoades Oil Co. v. CommissionerUnited States Tax Court · 1985
- State Office Supply, Inc. v. CommissionerUnited States Tax Court · 1982
- Suwannee Lumber Mfg. Co. v. CommissionerUnited States Tax Court · 1979
6 more not listed; retrieve them via the Exa API.