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sway the thinking of the appellate court that expressly disagreed
with the Cleveland Allerton Hotel, Inc. holding.21
Accordingly, at the time of the enactment of section
167(c)(2), the weight of case authority did not permit the relief
sought by petitioner. More significantly, in affirming the
Second Circuit Court of Appeals, the Supreme Court’s holding in
Millinery Ctr. Bldg. Corp. v. Commissioner, supra, resulted in
the same outcome as the one prescribed by section 167(c)(2);
i.e., no allocation of the acquisition cost to the lease was
permitted in circumstances where a leased asset is acquired.
Further, both the case precedent and the statute require that all
of the cost be allocated to the depreciable capital asset.22
21 Respondent attempts to resolve these entangled
circumstances by reference to our holding in Golsen v.
Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.
1971). There we expressed the view that we would conform to the
holding of a Federal Court of Appeals that is squarely on point,
irrespective of whether we agree with that Court of Appeals’
holding. We have specifically disagreed with the holding of the
Court of Appeals for the Sixth Circuit’s Cleveland Allerton
holding. See Millinery Ctr. Bldg. Corp. v. Commissioner, 21 T.C.
817, 823-824 (1954), affd. in part, revd. in part 221 F.2d 322
(2d Cir. 1955), affd. 350 U.S. 456 (1956). The appeal of this
case, as noted above, will be to the Court of Appeals for the
Second Circuit, which agreed with our holding and disagreed with
the Court of Appeals for the Sixth Circuit. See Millinery Ctr.
Bldg. Corp. v. Commissioner, 221 F.2d at 323.
22 Where land with improvements was acquired, the courts
have permitted the excess of the purchase price over the value of
the land to be allocated to the building, a depreciable asset.
In the present case, no such nondepreciable asset (such as land)
is involved, and under sec. 167(c)(2) all of the acquisition cost
is to be allocated to the acquired leased property.
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