Commissioner v. Center Inv. Co.

This is a petition for review of a decision of the United States Board of Tax Appeals in favor of the taxpayer and against the Commissioner’s claim that where in a prior tax year a building had been erected by a lessee of taxpayer-lessor, pursuant to a lease agreement to erect such structure on the leased land, there was income to taxpayer in the tax year of the forfeiture of the lease due to the freeing of the building of the lease obligation.

The Board found,' inter alia, that on January 23, 1930, the taxpayer “owned in fee simple a certain piece of real estate in downtown Seattle hereinafter referred to as Lot 1” and that on that date the taxpayer “leased Lot 1 and the contiguous Lot 2 to which it held only a leasehold interest, to the United Pine Center Corporation for a term of 97 years, 8 months, and 27 days. United Pine Center Corporation was, therefore, lessee as to Lot 1 and sub-lessee as to Lot 2 * * *

The Board also found that “The lease to United Pine Center Corporation fixed the net rental for the entire term without any provisions for revision. It required the lessee to construct at its own expense before July 1, 1930, a two-story building to cost not less than…