Sixth Circuit - Lessee purchasing leased property can deduct portion of purchase price to buy unexpired lease 

June 13: The U.S. Court of Appeals for the Sixth Circuit today issued a decision holding that a lessee—who buys the leased property from the lessor for a price greater than the value of the property—can immediately deduct as a business expense the portion of the purchase price paid to buy the unexpired lease. The Sixth Circuit, in affirming a federal district court’s judgment for the taxpayer, concluded that the taxpayer is not required to capitalize the entire purchase price. ABC Beverage Corp. v. United States, No. 13-1701 (6th Cir. June 13, 2014)

Read the 13-page Sixth Circuit decision [PDF 88 KB]

Read a June 2014 report [PDF 69 KB] prepared by KPMG LLP.

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