Archive for Leases

Thinking of Renting Out a Property? Make It Easier with Shared Equity

Renting your real estate can be a wonderful way to increase your cash flow. However, rental properties can also cause you headaches and add a lot of responsibilities onto you, as landlord. After all, in order to rent your property, you have to deal with tenants and handle their needs. However, it turns out there is a way to share some of that ownership responsibility with your tenants. It’s called shared equity, or a rent-to-own agreement.

The Benefits of Rent-to-Own

Typically, as landlord you are 100 percent responsible for the upkeep of the property. You also take on all of the risk, such as being responsible for a mortgage when you have a vacancy. But, when your tenant shares in the ownership of the property,[1] you keep many of the advantages of owning a rental property and also gain additional benefits.

The benefits aren’t one sided, either. Your tenant shares in equity on the home, as well as putting a down payment on it. And, they get a wonderful opportunity to carefully inspect a home before committing to the purchase (and build equity while making their decision!). The tenants also receive tax deductions that they would not be entitled to as typical renters.

If your agreement gives you 65 percent ownership and the tenant 35 percent ownership, then the tenant pays you rent for your 65 percent. You can treat your share just as you would any other rental property. This arrangement is approved by tax law.

Here are some reasons to consider a rent-to-own situation:

  • The tenant shares responsibility for property upkeep. Normally, as a landlord, you would be responsible for any necessary repairs, including scenarios like an unexpected breakdown of the refrigerator that needs urgent attention. With shared equity, however, tenants have their own interest in keeping the property in shape, whether they exercise their purchasing option or agree to sell the property with you. The tenant has become tenant-owner, and they should be expected to provide most of the day-to-day repair work, like lawn care. So, you won’t be getting calls in the middle of the night about urgent repairs! In addition, they are less likely to cause damage to floors, walls, or other parts of the property because increasing the property’s value is now their goal as well as yours.
  • You don’t have to worry about vacancies, which cost you money. Aside from the lost influx of money, you’re also out the money and time spent finding a new tenant and preparing the property for them. If vacancy goes on for several months or more, it’s going to cost you a lot, but a rent-to-own situation ensures that your tenant is in for the long-haul. They’re not likely to just give up their share of the equity in a home they live in.
  • You have no management fees. Management fees are an optional expense, but for many landlords it becomes necessary, especially if you have another job or business. Typically, management companies are hired to take care of things like property inspection, advertising for tenants, and providing or scheduling repairs. With your tenant-owner, none of this is necessary. You have a long-term renter who will more than likely take good care of the property themselves.
  • You tenant has more reason to make their payments on time every month. In a shared equity situation, your tenant is paying towards an end-goal, whether it’s to own the property in entirety or to own their share of the equity at the time of sale. This means that for the duration of the agreement, you know how much rent you will receive and for how long. You also know the possible scenarios for when the rental term comes to an end. Basically, you have a much better idea of your financial outcome than most landlords do.

Your Tax Situation

But, what about the taxes? Here’s something you don’t hear very often. Tax law regarding shared equity is very straightforward. In fact, for the more than 30 years it’s been on the books, there’s only one private letter ruling to use as an example (PLR 8410038). In this ruling, the landlord made a 20 percent down payment and took half the mortgage; the tenant took the other half. At the end of five years, their agreement allowed for the tenant to buy out the landlord by 1) reimbursing the down payment and 2) paying 50 percent of what the equity increased by since the beginning of the agreement to the landlord. During those five years, the tenant paid the landlord both a rental fee and 50 percent of the mortgage.

The sharing of expenses is, likewise, straightforward and laid out in tax law. Any tax benefits must be divided according to ownership interest. In the above case, both the landlord and the tenant-owner would receive 50 percent of the tax benefits.[2] In addition, for most shared equity situations, the relationship between parties is considered tenants-in-common. That means you’ll have to follow state tax laws, which typically require expenses such as repairs, taxes, and interest to also be divided according to ownership interest. Since your tenant will likely be completing repairs, they do have the right to request reimbursement from you for half the cost. Regardless of whether they pay 50 percent or 100 percent, the tenant only gets tax benefits for their vested interest (as do you).[3] Of course, you’ll want to check your particular state’s tax laws in this area.

Pay attention to how you agree to divide expenses in your equity-share agreement. In one court case, the landlord owned 50 percent of the equity but paid 100 percent of mortgage interest and property taxes on two properties.[4] It didn’t matter how much he paid; he could only deduct 50 percent from his taxes. Just because each party pays 50 percent of the mortgage doesn’t necessarily mean your ownership percentage is 50 percent each. Other factors, such as down payment, can come into play. Always check with an attorney when signing an equity-share agreement.

Calculating the Rent

Tax law also specifies that you and your tenant will need to come to a rental agreement based upon “fair market rent”.[5] All of this planning in advance should make you one happy landlord. You’re getting a written guarantee of how much cash you’ll be receiving for years to come.

As you know, any situation that deals with tax law requires proper documentation. So, be sure to keep a file with all the necessary information. One thing you will need to provide is evidence that your rent price is fair. Some ways to do this are to clip ads for other rentals in the area, print online ads for your area, get a written opinion from a consultant or rental management company, or get information from nearby tenants on what they pay for rent (including their names).

You’ll probably do some of this research anyway in order to come to your determination. The key is to hang on to your research documents. Research you performed but didn’t document don’t count for anything with the IRS, and as landlord, you bear the burden of evidence.

Following the Rules

Once you’ve found the perfect tenant-partner, you’ll want to follow three rules in order to comply with tax law.

  1. The equity-share arrangement must be detailed in a written agreement.[6] This document must include details regarding ownership of the residence by two or more people; agreement that one of the parties must occupy the dwelling as their primary residence; and, agreement to rent payment.
  2. The relationship must be one of joint ownership. According to tax law, both parties will own the property even after the rental period ends. The tax law technically stipulates a period of 50 years of ownership, but what you really need to know is that you both must, in fact, own the property.[7]
  3. Tax benefits are earned according to ownership. As stated above, you can only claim benefits for your share of ownership in the property.

Before entering a shared equity situation, plan accordingly. You’ll want to choose someone trustworthy to enter into a long-term ownership with. Hire a real estate attorney to help make sure you consider all the possible scenarios, and get everything in writing. And, always, always keep your records. If you do rent-to-own right, you can make renting your property both easier and more profitable.

  1. IRC Section 280A(d)(3)(C)(ii)(I).
  2. Prop. Reg. Sections 1.280A-1(e)(5)(iii)(B)(3); 1.280A-1(e)(5)(iii)(C) Example.
  3. Estate of Boyd v. Commr., 28 T.C. 564 (1957).
  4. Joseph J. James v Commr., TC Memo 1995-562.
  5. IRC Section 280A(d)(3)(B)(ii).
  6. IRC Section 280A(d)(3)(C).
  7. IRC Section 280A(d)(3)(D).

Increase Deductions on Your Vacation Home with a Hidden Tax Technique

Usually, when you want to research which tax deductions are available to you, you go to the IRS’s publications and tax regulations documents. The IRS can even be pretty helpful at times by letting you know exactly what you need to do in order to get your deductions. However, the technique in this article won’t be found in any of the typical tax literature. In fact, you’d only find it if you’ve been reading up on old court cases or tax treatises.

The Precedent

So, how does this tax tactic help you if it’s not approved in IRS documents? Aside from the typical sources for supporting your deduction strategies, you can also use tax court precedents. In 1981, Dorance and Helen Bolton found their money trapped behind vacation home deduction limits, but they decided to get creative and find a way around those limits.

Because they set this precedent, you can legally use the same technique today, even though the IRS doesn’t publicize it for everyone’s use. In fact, the IRS’s calculation methods for vacation homes are much more stringent. Nevertheless, the IRS is required to allow the method used by the Boltons because the tax court has ruled it a legal tax strategy.

How this Money-Saving Strategy Works

Do you have a second home, a ski cabin or beach house for example, that you both rent out and use for your personal use? If so, you’ve probably found that the vacation home rules cap the deductions allowed for rental expenses.[1] Additionally, for properties that qualify as a “residence” those rules are at their most stringent. Your property is considered a residence for tax purposes if you take advantage of its personal use for the greater of the following two time periods:[2]

  • More than 14 days in a year, or
  • More than 10 percent of the days you rent it at fair rental price during the year.

You see, when your home qualifies as a residence, you have to split your deductions between residence and rental property, and that creates two primary disadvantages for you: 1) your rental expenses are limited to your rental income, and 2) part of your mortgage interest and property tax deductions are considered rental expenses, which—because of the limit in #1—reduces the amount of other rental expenses you are able to deduct.

Now, here’s what the Boltons did to mitigate these disadvantages. They were able to come up with a way to decrease the amount of mortgage interest and property taxes that counted as rental expenses. Let’s take a look at how their method differs from that of the IRS:

  • IRS MethodCount the property’s total use. That means of your tenants rent the property for 75 days and you personally use it for 25, you divide the rental use days by the total number of days, 100. The use percentages divide up as 75 percent rental and 25 percent personal. Assuming your mortgage interest and property taxes come to $10,000, you must count $7,500 (i.e. 75 percent of $10,000) towards the rental expense limit.
  • Bolton MethodDetermine percentages for the entire year, not just for days of use. With this calculation, you take that same 75 days of rental use and divide it by 365 days, giving you only 21 percent rental use for the year. Again, given $10,000 in mortgage interest and property taxes, you now take 21 percent of that, getting a rental expense total of only $2,100. The Bolton method leaves you with an additional $5,400 of rental expenses that can be deducted.

To see how the numbers work out after deductions, here’s the Boltons’ case:[3]

  • 91 days of rental use
  • 30 days of personal use
  • 244 unoccupied days
  • $2,700 in gross rental income
  • $3,475 in expenses for mortgage interest and property taxes
  • $2,693 in expenses for rental property maintenance

The Boltons were able to claim an additional $1,738 in deductions. Adjusting for today’s dollars, you can save substantially more than that. This case has been on the books for more than 30 years and remains seldom-used, but the IRS is required by precedent tax law to allow it.[4] Now you know the secret, so start claiming your full rental deductions on your vacation home this year.

  1. IRC Section 280A(e).
  2. IRC Section 280A(c)(5) and (d)(1).
  3. Bolton v Commr., 77 TC 104, aff’d 694 F.2d 556 (9th Cir.).
  4. McKinney v Commr., 732 F.2d 414.

Getting the Most from Your Real Estate Options

Plenty of people will tell you that real estate options are a great way to make money. And, that can be true . . . if you have the right knowledge. By learning how to get the most from options on your real estate investments and rentals, you can increase your profits.

Stand-Alone Purchase Option

One category that can generate profit is the stand-alone purchase option. If you own a property, and someone would like the right to buy that property at a specific price and over a specific time period, this option allows you to receive cash from someone the day you authorize the option. Two things then may happen: 1) the buyer lets the option lapse, and you keep the cash and the property, or 2) the option is exercised, which means you sold your property (and often receive a selling-price bonus).

Here are some of the primary financial reasons people have for leasing their property with the option to buy:

  • Increase profits by fixing a higher rent price (typically applying some of this to the option amount).
  • Increase profits by requiring up-front cash for the option.
  • Protect your real estate by having a tenant who takes better care of the property (because it may eventually be theirs if they use the option).
  • Reduce costs by requiring the tenant to maintain the property and take responsibility for repair work.

Of course, if you are on the other side of the transaction and are buying the option, then you’ll want to arrange some kind of reward for yourself should you use the option. Often, people like to structure these options so that they get a better price on the property because they exercised the option (this is the most desirable outcome for the buyer).

Whether you’re buying or selling, options look pretty straightforward, but circumstances can complicate matters. Some options are structured to require that they be exercised. However, if you enter into such an option, it is viewed as a sales contract under tax law. If, for example, the rent for an option is so high that it forces a tenant to buy, tax law ignores the option, and your contract ends up as a sales contract as far as tax purposes are concerned. It turns out options are not as simple as they appear; varying scenarios can butt up against tax and legal obstacles.

In fact, even a lease without the option to buy can end up being viewed as a sale under tax law. How does this happen? If the tenant takes on the majority of rights, responsibilities, and enjoyment to the extent that they act as the owner of the property, the IRS ignores the lease.

Needless to say, it can come as quite a surprise when the IRS decides your lease is to be considered a sale. So, this article aims to provide some practical advice for securing your after-tax profits and navigating the additional rules associated with leases.

Keeping Control of Your Finances

Your after-tax financial results will depend upon how well you understand the rules regarding when a lease with an option to buy turns into a sale. The rules fall into three categories: 1) commercial real property, 2) personal property, and 3) a house or apartment used as the primary residence by the tenant.

By structuring your rent-to-own agreements so that they comply with tax law, you can avoid unpleasant legalities. These legal situations can result in additional consequences, such as negative articles on the front page of national newspapers, an attorney general investigation if you’re under Florida jurisdiction, or corrective legislation in a Texas jurisdiction.

Now that you have an idea of why you need to handle your options correctly, let’s look at a hypothetical scenario. You have a tenant who buys an option from you for $10,000 that allows her to buy your rental property for $300,000 at any point within the next 15 months. The tenant can do one of two things. She could exercise her option, in which case you treat the $10,000 as sales proceeds on the day the purchase option is used.[1] Or, she could choose not to use the purchase option, and you receive normal income from the $10,000 on the day the option lapses.[2]

Regardless of what your tenant decides, you get a good deal for several reasons:

  • You receive up-front payment for the option.
  • You can use the cash from purchase of the option on the day you receive it because it’s yours no matter which decision the tenant eventually makes.
  • You have no income taxes to pay for this money until the option lapses or is used.

As for your tenant, if she decides to exercise the option, the $10,000 acts as additional basis in the property for her. The lapse of the option depends on the nature of the property. If she intends to use it as a rental unit, the same rules apply that would apply to a loss on the sale of rental property.[3]

Given our hypothetical 15-month holding period, your tenant’s loss would be under Section 1231 (which applies only to long-term gains and losses). This is great for her because Section 1231 allows for:

  • Net section 1231 gains are tax-favored long-term capital gains, and
  • Net Section 1231 losses to be deducted as tax-favored ordinary losses.

However, if the tenant wanted to purchase the rental unit as a personal residence, she would not get the deduction for the option’s lapsing. That’s because a lapsed option for personal property generates a personal loss, which is not deductible.[4] So, options aren’t too difficult to figure out, but they can produce vastly different results under different circumstances.

Options that are Actually Conditional Sales

An option gives the purchaser the right to exercise a property purchase at terms and price that are determined at the start.[5] Some options, however, are actually masked sales. Obviously, any option that is exercised becomes a sale. But, if the option turns into a sale before it is exercised, then it is a sales contract rather than an option.

Here are a few examples that are not options:

  • Nonrefundable deposits—these do not specify terms for a continuing offer for a particular time period
  • High option prices that force the use of the option—the force makes it a sale from its beginning
  • Incidents of ownership and actions that convey possession imply a sale

You may have noticed that some of these are judged by the particular circumstances. For instance, what is considered a price that’s high enough to force a sale is somewhat subjective and depends upon the property and the parties involved. Because of this, issues of what is a sale or what is an option can be complicated. To add to the matter, an option that includes a lease gets even trickier.

In fact, sometimes the lease itself is considered a sale rather than a lease. That means you can really end up with results far different from what you intended when you combine a lease with an option, and either or both of them could end up actually being sales.

When it comes to taxes, a whole system of rules is in place to determine whether a lease is a lease or a sale. Here’s an example. Some public companies will use synthetic leases in order to make their profits look better to investors. These synthetic leases are reported as leases in their financial statements, but reported as purchases in their tax return. Because this strategy makes their profits look better, it increases the performance of the company’s stock. Because the tax return shows a purchase, the company can also depreciate the deductions.

Another example of a lease that’s considered a sale on taxes is a dealer’s rent-to-own program. One such contract’s status as a sale was determined in IRS private letter ruling 9338002. The IRS’s reasoning is that the lease-with-option-to-buy compels customers to make each of the monthly payments so they can own the item. Additionally, payments in such cases are usually high enough that customers pay market value for the item early on, at which point it makes no sense for them not to continue paying until they own the item. In fact, the IRS ruling states that such contracts produce substantially more revenue than if customers bought the item outright.

According to the IRS, the dealer does not have a true lease for tax purposes because:

  • The customer is effectively required to make a purchase by agreeing to the contract,
  • The rental payments end up far exceeding the amount necessary to transfer the title, and
  • The option price is zero, which contributes nothing towards the item’s fair value when the option is exercised (completion of payments).

The same set of criteria are used when judging real property leases.[6] First of all, the IRS defines three parties in a leveraged lease—the lessor, the lessee, and the lender to the lessor. The IRS will look at the following criteria to determine whether a lease is really a lease:[7]

  • The landlord (lessor) is at least 20 percent invested in the property;
  • The renter (lessee) cannot purchase the property for less than fair market value when the option is used; and
  • The lessee cannot have paid for property modifications, improvements, or additions.

Sometimes these criteria are out of your control. For example, it’s possible that after agreeing to an option, your property dramatically increases in value. That means that when the option is exercised, it will no longer reflect the fair market value, and does not meet the second criterion above. You should also watch out for vacation home tax rules, which you can run into when renting out a property, and are quite different from the tax laws for options.[8]

The purpose of setting up a lease with the option to buy is for you, as the current property owner, to make more money and ensure that your real estate is well care for by the tenant. In order to gain the financial benefits, you’ll need to understand the tax laws surrounding options. So, for your convenience, here’s a bit of advice for meeting the six standards in Revenue Ruling 55-540 and those in Revenue Procedure 2001-28:

  • Don’t apply the tenant’s rent to lessee equity.
  • Don’t give the property title to the lessee in exchange for a certain amount of rents or payments made.
  • If the option is relatively short, don’t make the payments a large portion of the total price to be paid.
  • Don’t allow rent prices to exceed fair market value substantially.
  • Don’t put add an interest equivalent to the rent due.
  • Have at least 20 percent invested in the property.
  • Require the option exercise price to be at least fair market value.
  • Don’t allow the lessee to make property modifications, improvements, or additions.

Take the right precautions, and you’re more likely for an IRS judgment to go the way you planned.

  1. IRC Section 1234(a)(1).
  2. Reg. Section 1.1234-1(b).
  3. Reg. Section 1.1234-1(a)(1).
  4. Reg. Sections 1.1234-1(f); 1.1234-1(g) Example (2).
  5. Black’s Law Dictionary, sixth edition, p. 1094.
  6. Revenue Ruling 55-540
  7. Revenue procedure 2001-28
  8. IRC Section 280A(d)(2).

Are You a “Dealer” or “Investor” for Tax Purposes?

Tax law is forever classifying people and making structures that either create benefits or disadvantages on your tax return. Part of getting the most from your return is about understanding the definitions of the IRS. Two that seem very similar, but have distinctly different consequences on your taxes, are real estate dealer and real estate investor.

What’s the Downside of Each?

We’ll start by discussing the disadvantages. That’s right—there is no golden choice when trying to figure out if you classify as a dealer or an investor. In either case, there will be some disadvantages.

As a real estate dealer:

  • Your profits are taxed at both the ordinary income rates (up to 35 percent) AND the self-employment rates (up to 14.13 percent).[1]
  • You may not depreciate property that you are holding with the intention of selling.
  • You may not use the tax-favored installment method to report dispositions of your property.
  • And, you may not use the Section 1031 exchange to defer taxes on properties you hold as a dealer.

As a real estate investor:

  • You are subject to the net capital losses limit of $3,000 (applied after gains are offset against losses).
  • You must treat selling expenses as a reduction in sales proceeds, which means those expenses produce benefits at the capital-gains tax rates only.

Admittedly, the dealer gets the lesser deal when it comes to disadvantages. The investor does get to depreciate property, is allowed to sell using the tax-favored installment method, and may choose to use a Section 1031 exchange, thereby deferring taxes on a disposition.

What about the Up Side?

Every coin has a heads and a tails. And, it’s the same with tax designations. Both dealers and investors gain some advantages from their respective positions.

Advantages for real estate dealers include:

  • You are treated as a business and may treat most expenses as ordinary business deductions (advertising, commissions, legal fees, real estate sales, etc.).
  • Your property sale losses are not limited capital loss cap of $3,000 that limits investor properties.
  • Your losses are deducted as ordinary losses.
  • You get to deduct the entire loss (either immediately or using the net operating loss rules to deduct it over time—these rules allow you to carry back your losses up to five years and forward up to twenty years).

Advantages for real estate investors include:

  • Your sales profits are taxed at 15 percent or less, a tax-favored capital gains rate.
  • You are not subject to the self-employment tax.

Practical Application

So, what does all this mean for you and your business? Let’s run through some example numbers. For the example, we’ll say you have a $90,000 profit from a property sale. Based on the tax rates mentioned above, your taxes as a dealer could be as high as $36,370.[2] Your taxes as an investor might be as high as $13, 500.

You can clearly see that having your properties qualify as investment sales generates a considerable tax savings—potentially $22,870!

However, depending upon your business structure and activities, it may not be possible to define all of your property sales as investment sales. No problem. The IRS has no qualms with an individual taxpayer acting as part dealer and part investor. You read that right; you can balance the pros and cons of each situation. It’s simply a matter of taking each property on a case-by-case basis.[3]

Not so fast. You may think the IRS is giving you some kind of free gift by allowing this pick and choose method, but it’s not quite as unstructured as all that. You will be required to make a clear distinction in your record books. You didn’t think the IRS was going to let you off without documentation, did you? And, this means you must decide before-hand which route you’re going with each property sale. You cannot simply go back over your sales at tax time and assign designations. You will have to establish what your intent was with the sale—dealer sale or investment sale.

Tips on Documentation

Good documentation of your purpose and activities helps you to establish your case with the IRS. You should determine, and make note of, your intent for the property throughout the process:

  • When you purchase the property;
  • During your ownership; and
  • At the time you sell it.

If you keep records throughout the process (not just at the time of sale) it gives your case credibility. It’s important to keep in mind, however, that if your return is challenged in court, they will likely examine the sale when they rule on whether you acted as a real estate dealer or real estate investor on a particular property.[4] None of this means that your purpose may not change between the time you buy a property and sell it, but at least you will be prepared to understand and plan for such a scenario.

The All Important Point-of-Sale

Important: The point-of-sale is the most critical part of the process in determining your investor or dealer status. It’s often the deciding factor in IRS decisions. Although a single piece of real estate can have features of both dealer and investor property, it can only be treated as one or the other. Take a look at the characteristics of each from a tax standpoint.

  • Real Estate Dealer—First off, dealer property is held with the intention of being to customers in the ordinary fashion of business or trade.[5] If you buy and sell many properties throughout the year, you are likely a dealer regarding those properties.[6] Unfortunately, the IRS has not established any set number for determining dealer status, so it’s all about making your case. In fact, number is only one factor, and in previous rulings:
  1. A company earned dealer status with only one sale because it had already agreed on sale to a third party prior to purchasing the property itself;[7]
  2. A taxpayer, Mr. Goldberg, did not earn dealer status even with 90 home sales in a year.[8] In his case, the homes were built for rentals and used as such prior to the time of sale.

However, in the majority of cases, more sales equal dealer properties. In addition to the influence of the number of properties sold, real estate that you subdivide also has an increased chance of achieving dealer status,[9] except under Section 1237.[10] Removing a lien can also make a property more salable under the ordinary processes of business[11] (recall that dealer property is sold in the ordinary course of business).

Several other traits indicate a dealer business transaction over investment actions. They include active marketing and sales activities,[12] property held for a short period of time (indicating the intention to turn over the property for profit),[13] generally making your living as a dealer,[14] regularly buying and selling real estate for your own account,[15] and buying property with the proceeds from another property.[16]

  • Real Estate Investor—In contrast to dealer property, investor property is held with the intention of producing rental income[17] or appreciating in value. This means that investor properties are typically held for longer periods of time[18] and are not often sold, unlike the quick turnover of a dealer property.[19] Other situations in which a court may rule your property is an investor property include acquiring the real estate by inheritance,[20] dissolution of a trust,[21] or a mortgage foreclosure.[22] It’s even possible for you to make improvements to such property prior to selling it and still retain investor status.[23] [24] Just don’t put the proceeds into more real estate or subdivide the property[25] if you want to maintain that status.

If you don’t make clear in your documentation which type of property sale you are making, the IRS will make the decision based on their interpretation, and that is not the best situation for you! So, look at those characteristics above again. Since you’re going to know at the outset what your purpose is with each property, you can make sure to include as many of the appropriate features as possible well before the sale.

  1. The usual self-employment tax rate times the Schedule SE adjustment.
  2. Assuming the real estate profits were your only income.
  3. Tollis v Commr., T.C. Memo 1993-63.
  4. Sanders v U.S., 740 F2d 886.
  5. IRC Section 1221(a)(1).
  6. Sanders v U.S., 740 F2d 886; Suburban Realty Co. v U.S., 615 F2d 171.
  7. S & H, Inc., v Commr., 78 T.C. 234.
  8. S & H, Inc., v Commr., 78 T.C. 234.
  9. Revenue Ruling 57-565
  10. IRC Section 1237.
  11. Miller v Commr., T.C. Memo 1962-198.
  12. Hancock v Commr., T.C. Memo 1999-336.
  13. Stanley, Inc. v Schuster, aff’d per curiam 421 F2d 1360, 70-1 USTC paragraph 9276 (6th Cir.), cert den 400 US 822 (1970); 295 F. Supp. 812 (S.D. Ohio 1969).
  14. Suburban Realty Co. v U.S., 615 F2d 171.
  15. Armstrong v Commr., 41 T.C.M. 524, T.C. Memo 1980-548.
  16. Mathews v Commr., 315 F2d 101.
  17. Planned Communities, Inc., v Commr., 41 T.C.M. 552.
  18. Nash v Commr., 60 T.C. 503, acq. 1974-2 CB 3.
  19. Rymer v Commr., T.C. Memo 1986-534.
  20. Estate of Mundy v Commr., 36 T.C. 703.
  21. U.S. v Rosbrook, 318 F2d 316, 63-2 USTC paragraph 9500 (9th Cir. 1963).
  22. Cebrian v U.S., 181 F Supp 412, 420 (Ct Cl 1960).
  23. Yunker v Commr., 256 F2d 130, 1 AFTR2d 1559 (6th Cir. 1958).
  24. Metz v Commr., 14 T.C.M. 1166.
  25. U.S. v Winthrop, 417 F2d 905, 69-2 USTC paragraph 9686 (5th Cir. 1969).