Leslie Co. v. Commissioner
case brief
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539 F.2d 943, 1976 U.S.
App. 76-2 U.S. Tax Cas. (CCH) P9553; 38 A.F.T.R.2d (RIA) 5458
CASE SYNOPSIS: Appellant
challenged a decision of the United States Tax Court which held that
appellee could claim a loss where the fee conveyance aspect of the
transaction was a sale entitled to recognition when appellant claimed
deficiencies under I.R.C. § 1031 for a like-kind exchange.
FACTS: Appellee entered into an agreement to purchase property. Appellee was to erect a plant and sell the building to another company. At the time of purchase, the other company agreed to lease back the facility to appellee. Appellee reported and deducted a loss on its corporate income tax return for the loss on the sale of the property. Appellant disallowed the claimed loss and alleged that the sale and leaseback transaction was an exchange of like-kind property within the scope of I.R.C. § 1031. Appellee contended that the property was a sale, therefore, the loss was recognized. The court held that the conveyance of the property was a sale and appellee could take a deduction for the loss. Appellee had sold the property unconditionally and leased back for fair value. Further, the property was transferred for money consideration only.
CONCLUSION: The court affirmed the tax court's holding that appellant could not charge deficiencies when appellee claimed a loss on a leaseback because appellant had sold the property unconditionally and leased back for fair value and the property was transferred for money consideration only.
FACTS: Appellee entered into an agreement to purchase property. Appellee was to erect a plant and sell the building to another company. At the time of purchase, the other company agreed to lease back the facility to appellee. Appellee reported and deducted a loss on its corporate income tax return for the loss on the sale of the property. Appellant disallowed the claimed loss and alleged that the sale and leaseback transaction was an exchange of like-kind property within the scope of I.R.C. § 1031. Appellee contended that the property was a sale, therefore, the loss was recognized. The court held that the conveyance of the property was a sale and appellee could take a deduction for the loss. Appellee had sold the property unconditionally and leased back for fair value. Further, the property was transferred for money consideration only.
CONCLUSION: The court affirmed the tax court's holding that appellant could not charge deficiencies when appellee claimed a loss on a leaseback because appellant had sold the property unconditionally and leased back for fair value and the property was transferred for money consideration only.
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Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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