- 33 -
tially less than its minimum annual basic rent obligation under
the 1985 sale and leaseback agreements.
We conclude that the material facts outlined above bring the
expenditures at issue within the purview of U.S. Bancorp &
Consol. Subs. v. Commissioner, 111 T.C. 231 (1998). On the
record before us, we reject petitioner’s argument that Metrocorp,
Inc. v. Commissioner, 116 T.C. 211 (2001), and T.J. Enters., Inc.
v. Commissioner, 101 T.C. 581 (1993), require that such expendi-
tures be deducted under section 162(a).21 The material facts in
Metrocorp, Inc. v. Commissioner, supra, and T.J. Enters., Inc. v.
Commissioner, supra, are distinguishable from the material facts
in the instant case, and petitioner’s reliance on those cases is
misplaced.22
21Petitioner argues in the alternative that, even if the
expenditures at issue paid in 1992 are required to be capital-
ized, the expenditures at issue paid in 1993 and 1995 were not
directly related to the modification of the 1985 sale and
leaseback and should not be capitalized. On the record before
us, we reject that argument. We have found that there was an
integrated plan to modify and enhance the 1985 sale and leaseback
agreements in order to reduce substantially petitioner’s minimum
annual basic rent obligation to the owner participants. Peti-
tioner’s obligation to pay the expenditures at issue was imposed
by and had its origins in the 1992 amendments. See Wells Fargo &
Co. and Subs. v. Commissioner, 224 F.3d 874, 884, 886-887 (8th
Cir. 2000), affg. in part and revg. in part 112 T.C. 89 (1999).
Petitioner undertook such an obligation in order to induce the
owner participants and Mercer County to agree to the integrated
plan to modify and enhance the 1985 sale and leaseback agreements
so as to reduce substantially petitioner’s minimum annual basic
rent obligation to the owner participants.
22Unlike respondent who argues here that petitioner paid the
(continued...)
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