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generally repealed this credit for property placed in service
after December 31, 1985. One of the transitional rules to this
repeal is the world headquarters rule contained in TRA section
204(a). TRA section 204(a)(7) provides:
(7) Certain Leasehold Improvements.--The
amendments made by section 201 shall not apply to any
reasonable leasehold improvements, equipment and
furnishings placed in service by a lessee or its
affiliates if--
(A) the lessee or an affiliate is the
original lessee of each building in which
such property is to be used,
(B) such lessee is obligated to lease
the building under an agreement to lease
entered into before September 26, 1985, and
such property is provided for such building,
and
(C) such buildings are to serve as world
headquarters of the lessee and its
affiliates.
For purposes of this paragraph, a corporation is an
affiliate of another corporation if both corporations
are members of a controlled group of corporations
within the meaning of section 1563(a) of the Internal
Revenue Code of 1954 without regard to section
1563(b)(2) of such Code. Such lessee shall include a
securities firm that meets the requirements of
subparagraph (A), except the lessee is obligated to
lease the building under a lease entered into on June
18, 1986.
The requirements set forth in TRA section 204(a)(7) are
cumulative, and a taxpayer such as petitioner must prove all of
those requirements in order to receive the benefits of that
section. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115
(1933); Payless Cashways v. Commissioner, 114 T.C. 72, 77 (2000).
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