- 17 - C. Petitioner’s Alternative Position. Although we have decided that petitioner’s acquisition of the vessel is governed by section 167(c)(2), the same result would have been reached even if section 167(c)(2) had not been enacted. Petitioner argues that we should treat the acquisition as though it were two separate payments or portions. Petitioner contends that one portion would be attributable to the acquisition of a vessel worth substantially less than the $108 million total payment and the other should be attributable to the cancellation of a burdensome lease. Respondent points out that petitioner chose the approach to acquire the vessel instead of making the payment to terminate the burdensome lease. We note that petitioner’s cost to acquire the vessel was approximately 20 percent less than the cost of the option permitting termination of the lease. Petitioner, therefore, wishes us to treat the acquisition of the vessel as though it had, in effect, exercised both choices-- petitioner wishes “to have its cake and eat it too!”12 11(...continued) * * * [the taxpayer] owned after May 3, 1978, which is in issue. Rather, it is the interest which * * * [the taxpayer] purchased from * * * [the owner/lessor] on that date, i.e., a fee simple interest subject to the outstanding lease. * * * [Id.; with emphasis as suggested by respondent.] 12 Petitioner obviously followed the less costly approach from a financial perspective, but not necessarily from a tax perspective. Petitioner has provided no explanation for the 20 percent larger cost to terminate the lease than to acquire the (continued...)Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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