Sale of lease

[Bucky]

Client receives rent for two cell phone towers on his property. Third party (Unison Site Management) offered client lump sum amount to purchase the leases. They state they can structure this tranaction to receive capital gain treament. Has anyone run across this situation.
I have checked out the company and looks OK. It actually would be a pretty good deal for the taxpayer as the lease agreement he has now is not guaranteed.

Thanks
Bucky

P.S. Anyone else out there which the 6 month extension never happened!

[Bird Legs]

Sale of Lease

Since no one else has responded, I will give it a try.
This is off my head. Because the lease income is ordinary income the proceeds from
the sale of the lease would be ordinary also, form 4797. Zero basis.
Nothing to back this up. Just trying to think of ways to handle it.

[Bees Knees]

There have been numerous court cases where taxpayers assigned future income to another in exchange for consideration and treated it as a capital gain. I think court decisions have gone both ways, depending on facts. I suppose if this company knows what they are doing, it is possible. However, I would advise some extensive independent research on the issue. Have the contract taken for a second opinion by an expert in the area to see if it will fly.

[OldJack]

First the question has to be asked "is the lease a capital asset in the hands of the holder"? Without other facts, I would guess that it is not and therefore ordinary income as Bird Legs says.

[Jan]

Here is one case that may pertain to the question. I'm just fishing

Amount Received by Lessee for surrender of Lease Held Capital Gain.
Taxpayers held property under a year-to-year lease. Pursuant to an agreement with the landlord, the lessees “vacated and surrendered” the premises before the expiration date of the lease. In exchange for this surrender, taxpayer received $7,500. Held, this amount was a capital gain rather than ordinary income. Commissioner v. Golonsky, 200 F.2d 27 (3r Cir. 1952)