- 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