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factor shows that section 167(c)(2) applies only where the lease
is to continue.
Respondent correctly points out that the example and
discussion of continuing leases does not “expressly condition the
application of section 167(c)(2) on the acquisition of a
continuing ‘interest of a lessor under a lease of tangible
property.’” In the context of the commentary and the example, we
agree with respondent that it was not intended to limit the
application to a particular type of transaction set forth in the
example. Although the example discusses a lease that continues
beyond the time of acquisition, it is clear that the example is
not intended to be all-inclusive. More particularly, the
statutory language could easily apply to leases that terminate
upon or immediately after acquisition and/or leases that continue
beyond acquisition of the leased asset. Accordingly, the
legislative history does not provide definitive guidance or a
direct answer to our inquiry of whether section 167(c)(2) applies
only to a situation where a lease is to continue in futuro. The
commentary and the example do make it absolutely clear, however,
that all costs were intended to be allocated to the depreciable
tangible property.
Petitioner also points out that one of the purposes for
enacting section 167(c)(2) was to deal with a specific
controversy between lessor/taxpayers and the Internal Revenue
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