Earnest and Laura Tillman - Page 11

                                       - 11 -                                         
          were intended to be other than purchases.  The acquisition                  
          documents, but for the use of the terms “rent” and “lease”,                 
          contain language that is more indicative of purchases than of               
          leases, and Mr. Tillman, by his own actions, represented himself            
          to third parties (including the Internal Revenue Service) as a              
          purchaser of the trucks.  We also find relevant the facts:                  
          (1) The agreement underlying the acquisition of the 1986                    
          Peterbilt provided that Mr. Tillman would “purchase” the truck              
          upon his payment of the total “rent”, and (2) the total “rent”              
          was a close approximation of the total amount that Mr. Tillman              
          would have had to have paid had he financed the truck’s purchase            
          with a financial lender.5  The fact that a purported lessee will            
          pay a nominal fee to acquire “leased” property upon the                     
          expiration of the “lease” tends to show that the property was               
          actually sold to him or her, M & W Gear Co. v. Commissioner,                
          54 T.C. 385, 395 (1970), affd. on this issue 446 F.2d 841 (7th              
          Cir. 1971), and the fact that no payment is required, as is true            
          with the case at hand, tends to show the same.  We hold for                 
          respondent on this issue.6                                                  

          5 The parties have stipulated that Mr. Tillman would have                   
          been required to make 60 monthly payments of $1,604, had he                 
          purchased the 1986 Peterbilt with a 20-percent downpayment and              
          financed the rest at an interest rate of 14.5 percent.                      
          6 We also note that Mr. Tillman’s rental payments are not                   
          deductible under sec. 162(a)(3).  Sec. 162(a)(3) allows a                   
          deduction for rental payments for the use or possession of                  
          property to which the taxpayer has not taken title, or is not               
                                                             (continued...)           




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

Last modified: May 25, 2011