- 5 -
Cir. 1991); see also Owen v. Commissioner, 881 F.2d 832, 834 (9th
Cir. 1989), affg. T.C. Memo. 1987-375.
Although the leases were negotiated separately and the terms
changed, C & C purchased the buses for the sole purpose of
leasing them to Great American. At the time the buses were
placed in service and the first lease was entered into, the
parties believed C & C would lease the buses to Great American
beyond the period stated in the lease. Indeed, the term of the
two leases, when aggregated, was 68 months, more than half the 9-
year useful life of the buses. In addition, petitioners failed
to introduce any evidence relating to whether their allowable
section 162 deductions exceeded 15 percent of the rental income
received by C & C during the first 12 months of the lease. In
short, the lease did not meet the requirements of section
46(e)(3). Accordingly, the Charlsons are not entitled to the ITC
relating to the years in issue.
We also note that Great American was not entitled to claim
the ITC. Section 48(d) allows a lessor to elect to treat the
lessee as the purchaser if the lessor files a statement of the
election. See sec. 1.48-4(a), Income Tax Regs. Petitioners did
not file such an election. To the contrary, C & C claimed the
credit in 1985 and passed it through to the Charlsons.
Page: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011