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argument, that even if the Court were to hold that the 11.5-month
period of zero rent provided in the lease agreement is a reason-
able rent holiday described in section 467(b)(5)(C) and/or was
not granted for a principal purpose of tax avoidance so that
Partnership shall accrue rent for 1988 under the lease agreement
by allocating that rent in accordance with that agreement as
provided in section 467(b)(1)(A), and not pursuant to the con-
stant rental accrual method as provided in section 467(b)(2),
Partnership nonetheless would be required for 1988 to accrue rent
under section 467(b)(1)(A) in an amount at least equal to the
amount of the Partnership letter of credit (viz, $8,872,245) that
BCE delivered to Partnership.
Reasonable Rent Holiday--Section 467(b)(5)(C)
The Code does not define what is meant by the term "reason-
able rent holidays" in section 467(b)(5)(C).15 However, the
15 Although sec. 467(b)(5) required the Secretary to issue
regulations prescribing circumstances relating to, inter alia,
reasonable rent holidays under which agreements will not be
treated as disqualified leaseback or long-term agreements, no
regulations were issued under sec. 467 until June 3, 1996. On
that date, respondent issued proposed regulations under sec. 467
that do not apply to (1) rental agreements entered into prior to
the date on which regulations under that section are published as
final regulations in the Federal Register and (2) disqualified
leaseback and long-term agreements entered into prior to June 3,
1996. Sec. 1.467-8, Proposed Income Tax Regs., 61 Fed. Reg.
27850 (June 3, 1996). Those proposed regulations, which are not
in any event binding on the Court, Zinniel v. Commissioner, 89
T.C. 357, 369 (1987), do not apply to the lease agreement in-
volved here that was entered into in June 1988, and nothing
herein is intended to convey, and nothing herein should be
(continued...)
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