- 16 -
Commissioner, T.C. Memo. 1989-382; Van Valkenburgh v.
Commissioner, T.C. Memo. 1967-162.
Considering all the facts, we conclude that it was unlikely
that the $1 option would remain unexercised at the end of the
term. Furthermore, while there is no indication that title
actually passed to the lessees during the term of the lease, the
lessees bore the burdens and benefits of ownership. Therefore,
the lease agreements substantially shifted the benefits and
burdens of ownership from petitioner to the lessees and
constitute sales for tax purposes. Accordingly, respondent’s
position on this issue is sustained.
Unreported Gain on Sale of Assets
Findings of Fact
On March 6, 1992, Olympic sold property leased from
petitioner to Ralph’s Concrete and Vance Gribble. In exchange
for the property, Olympic received cash proceeds of $440,121.
Olympic remitted $216,395 of the $440,121 to petitioner and
retained $223,726. On its March 31, 1992, tax return, petitioner
reported a $227,061 gain from the sale of these assets. Both
parties agree that petitioner incorrectly computed the gain from
the sale of these assets. The correct gain is $315,954.
Discussion
On March 6, 1992, Olympic sold various pieces of pumping
equipment that were owned by petitioner. On its 1992 tax return,
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011