Federal Taxation

Tax Research Problem 3-63

William owns a building that is leased to Lester's machine shop. Lester request that William rewire the building for new equipment Lester plans to purchase. The wiring would cost about $4000, but would not increase the value of the building because its only use is in connection with the specialized equipment. Rather than lost Lester as a lessee, William agrees to forgo one month's rent of $1000 if Lester will pay for wiring. Because Lester does not want to move, he agrees. What amount, if any, must William include in gross income?

Sec. 109

Reg. Sec. 1.109-1

CIR v. Grace H. Cunningham, 2 AFTR 2d 5511, 58-2 USTC 9771(9th Cir, 1958)