- 10 -
if neither party gives contrary notice; held, lease is 2-year
lease because either party can prevent renewal by giving notice).
See also Sheppard v. Rosenkrans, 85 N.W. 199 (Wis. 1901).
Petitioner, as lessor, had to agree with the lessee/law firm as
to the rent that would be payable for any additional rental
period after the first 5 years. Moreover, if they were unable to
reach such an agreement at least 30 days before the 5-year period
expired, petitioner possessed the sole discretion to declare the
option to renew null and void.
We also bear in mind that the absence in the 1987 lease of
an agreed-upon rent for the renewal period made the 1987 lease
unenforceable for any period after the 5-year period expired.
See Wis. Stat. Ann. sec. 704.03(1) (West 1998) (Wisconsin statute
of frauds provides that a lease for more than a year, or a
contract to make such a lease, is unenforceable unless it sets
forth the amount of rent or other consideration). In fact, an
enforceable contract for the additional period did not exist
until December 27, 1991, when the parties agreed on a rent for
the renewal period and created a writing memorializing that new
agreement. See Borkin v. Alexander, 132 N.W.2d 587 (Wis. 1965);
Ratcliff v. Aspros, 35 N.W.2d 217 (Wis. 1948).
Petitioner also argues that he is not subject to the
recharacterization rule by virtue of section 1.469-11(b)(1),
Income Tax Regs., which allows taxpayers, at their option, to use
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011