- 2 -
terminating a burdensome lease. R contends that sec.
167(c)(2), I.R.C., enacted in 1993, requires that the
acquisition cost must be allocated solely to the
acquired tangible capital asset. P contends that the
holding of Cleveland Allerton Hotel, Inc. permits the
allocation.
Held: Sec. 167(c)(2), I.R.C., interpreted to
prohibit allocation of any portion of the asset
acquisition cost to a deduction for P’s termination of
a burdensome lease.
Harold J Heltzer, Philip F. McGovern, Jerry L. Robinson, and
Howard Mark Weinman, for petitioners.
Steven R. Winningham, Joseph F. Long, Carmino J.
Santaniello, S. Katy Lin, and Robin L. Peacock, for respondent.
OPINION
GERBER, Judge: Respondent moved for partial summary
judgment on the legal question of whether section 167(c)(2)2
applies to petitioner’s3 acquisition of ownership of a previously
leased oceangoing vessel. Respondent contends that section
167(c)(2) would require petitioner to allocate to the depreciable
asset all of its cost and, further, that petitioner was not
entitled to allocate a portion of the cost to a deduction for
2 Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the periods under
consideration, and Rule references are to the Tax Court Rules of
Practice and Procedure.
3 References to “petitioner” in this group of related and
consolidated cases refers to Union Carbide Corp., petitioner in
docket Nos. 14643-97 and 11119-99.
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