Analyze  all or a portion of Jordan Marsh Company v. CIR, using the Issue, Rule, Application, and Conclusion methodology in your comments below.  Remember to “Blue Book” where appropriate.
Jordan Marsh Company v. CIR, 269 F. 2d 453 – Court of Appeals, 2nd Circuit 1959
1 thought on “Jordan Marsh Company v. CIR, 269 F. 2d 453 – Court of Appeals, 2nd Circuit 1959”
Leave a Reply
Facts: Sale leaseback transaction. Taxpayer, owner of a large department stor, conveyed its real estate – land and building – to investors for $2.3M and then entered into 30 year lease. Claiming that the transaction was an outright sale, taxpayer sought to deduct the adjusted basis for the property and the cash received. IRS argued that the transaction was an exchange of like property – a fee interest for a long-term lease – plus cash to boot and thus sought relief.
Issue: Is the transaction a sale or an exchange?
Rule: Internal Revenue Code Sec. 1031
Application: The price paid by buyer was fair market value. Plus, rentals were normal such that leasehold had no capital value in excess of present value in the taxpayer’s hind.
Conclusion: Sale