- 34 -
tenant. Pursuant to the Atrium Lease, UBD agreed to lease the
Atrium Land for a period of 30-1/2 years, commencing December 30,
1988, and ending June 30, 2019. The Atrium Lease provided that
UBD would pay rent to LBC in the amount of $1 a year and to LAL
in the following amounts: $1,893,939.39 annually from January 1,
1989, through December 31, 1998; $1,489,898.99 annually from
January 1, 1999, through June 30, 2009; and $303,030.30 annually
from July 1, 2009, through June 30, 2019.
The Atrium Lease contained a recital stating as follows:
“LBC and LAL desire to lease their undivided interests in the
Atrium to Tenant [UBD] in order to provide unified operation of
the Atrium and Tenant desires to lease such interest from
Landlord for the same purpose.”
c. Tax Treatment by UBC of the 1988 Atrium Transaction
On its Federal income tax return for the taxable year 1988,
the UBC affiliated group reported a gain on the sale of a 48-
percent interest in the Atrium Structure and the Skyway of
$3,803,496, based on an amount realized of $16,964,800, a cost
basis of $15,345,273, and accumulated depreciation of $2,183,969.
The reported amount realized was based on a total sales price for
a 48-percent interest in the Atrium Structure, the Skyway, and
the land underlying the Atrium of $17,100,000 less $135,200
allocated to the underlying land ($17,100,000 - $135,200 =
$16,964,800). The reported cost basis equaled 48 percent of the
cost bases of the Skyway and that part of the Atrium Structure
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 NextLast modified: May 25, 2011