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New Capital Hotel, Inc. v. Commissioner

United States Tax Court
28 T.C. 706 (1957)


Facts

New Capital Hotel, Inc. (New Capital) (plaintiff) owned hotel property which it leased out from January 1, 1950, to December 31, 1959. Under the terms of the lease, the lessee was to pay New Capital $30,000 each year. New Capital also required the lessee to pay the last year’s rent in advance. The lessee paid the $30,000 for 1959 during 1949. No restrictions were placed on New Capital’s use of the $30,000. Because New Capital is an accrual method taxpayer, it believed that the $30,000 was not taxable until 1959, when the income was actually earned. The Commissioner (defendant) disagreed and determined that the $30,000 was taxable income in 1949, the year in which it was received.

Rule of Law

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Issue

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Holding and Reasoning (Black, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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