- 21 -
Respondent further asserts, apparently as an alternative
14(...continued)
suggest in the foregoing excerpt from her answering brief,
apparently respondent believes that it supports her position
that, under the facts and circumstances presented here, not
only does the 11.5-month period of zero rent not qualify as a
reasonable rent holiday described in sec. 467(b)(5)(C), it
also was granted for a principal purpose of tax avoidance.
Although we deal below with those contentions, we note that if
respondent also is suggesting by the foregoing passage from
her answering brief that the lease agreement does not provide
for the allocation of rent referred to in sec. 467(b)(1)(A),
see sec. 467(b)(3)(B), we find any such suggestion to be
contrary to the parties' stipulation that "The Lease Agreement
sets forth as Schedule E a schedule that allocates the rental
payments for the entire lease period, providing for the amount
of the rental payments and specifying the due date for each
month." See Piccadilly Cafeterias, Inc. v. United States,
Fed. Cl. (Aug. 19, 1996).
We also note that the reasons quoted above that are relied
on by respondent for respondent's conclusion that "Schedule E
cannot be said to relate to the terms of the lease agreement"
cite provisions in the lease agreement that we do not find
relevant to that inquiry. The provisions in the lease agree-
ment on which respondent relies that require the basic rent to
be equal to the lower of fair market rental and 90 percent of
the average monthly installment of basic rent paid by the
lessee during the lease term are to apply only to each of the
first six extensions of that lease term, if any, and were not
prescribed in Schedule E. Schedule E set forth a schedule of
basic rental payments only for the lease term of the lease
agreement that started on June 17, 1988, and ends on June 1,
2013. Moreover, pursuant to the lease agreement, any exten-
sions of the lease term were to occur only at the option of
the lessee, that is to say, only if the lessee elected at the
times and on the terms prescribed in the lease agreement to
extend the lease term beyond June 1, 2013. In this connec-
tion, sec. 467(e)(6) provides that, except as provided in
regulations prescribed by the Secretary, there shall not be
taken into account in computing the term of any agreement for
purposes of sec. 467 any extension that is solely at the
option of the lessee. The Secretary has promulgated no
regulations under sec. 467(e)(6) that apply to the instant
case. See infra note 15.
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