Question:

Kim leased an office building to USA Corporation under a ten-year lease specifying that at the end of the lease USA had to return the building to its original condition if any modifications were made. USA changed the interior of the building, and at the end of the lease USA paid Kim $30,000 instead of making the required repairs. Does Kim have to include the payment in gross income?

A partial list of research sources is

• Sec. 109
• Boston Fish Market Corp., 57 T.C. 884 (1972)
• Sirbo Holdings Inc. v. CIR, 31 AFTR 2d 73-1005, 73-1 USTC 9312 (2nd Cir., 1973)

Please make it two pages and conclude with summary of the court decision on the case.