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Petitioners, TUP 130, and TUP 130's management company were to be
insureds under the public liability policy. Petitioners were
also responsible for paying all municipal, county, State, and
Federal taxes assessed against their leasehold interest,
fixtures, furnishings, equipment, stock-in-trade, and other
personal property of any kind owned, installed, and existing in
the Store Space.
B. The Franchise Agreement
On August 23, 1995, petitioners and T.J. Cinnamons, Inc.,
executed the Franchise Agreement, authorizing petitioners to
operate a T.J. Cinnamons franchised bakery at the Store Space.
The initial term of the Franchise Agreement was 10 years.
Pursuant to the Franchise Agreement, petitioners paid to T.J.
Cinnamons, Inc., an initial franchise fee of $17,500.
(Petitioners concede that the $17,500 franchise fee must be
capitalized and amortized over a period of 15 years, as in the
notice of deficiency.)
C. The Construction Contract
As of November 1, 1995, petitioners and Regional Development
& Building Inc., executed the Construction Contract for the
Improvements. Petitioners performed the construction required
under the Lease during the period from September through December
1995.
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Last modified: May 25, 2011