Harry E. Peaden, Jr. - Page 1
















                                   113 T.C. No. 6                                     


                               UNITED STATES TAX COURT                                


              HARRY E. PEADEN, JR. AND CINDY D. PEADEN, Petitioners v.                
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket No. 14837-97.             Filed August 9, 1999.                 
                         C, P's wholly owned S corporation,                           
                    leased trucks under master lease agreements                       
                    (master leases).  For each truck, C and the                       
                    lessor agreed to a base rent dependent on the                     
                    lessor's cost of the truck.  The master                           
                    leases contain a terminal rental adjustment                       
                    clause (TRAC), as defined in sec. 7701(h)(3),                     
                    I.R.C., providing that the lessor, at the                         
                    conclusion of the lease term, must sell the                       
                    truck and remit to C any sale proceeds that                       
                    exceed the remaining base rent plus the                           
                    lessor's cost of arranging the sale.  R does                      
                    not argue that the lease agreements are not                       
                    "qualified motor vehicle operating                                
                    agreements" within the meaning of sec.                            
                    7701(h)(2), I.R.C., but instead argues that                       
                    the TRAC may be taken into account in                             
                    determining whether the transactions entered                      
                    into pursuant to the master leases (lease                         
                    transactions) should be treated as leases.                        
                         Held:  Pursuant to sec. 7701(h)(1),                          
                    I.R.C., the TRAC contained in the master                          





Page:   1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011