- 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.Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
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