Opinion ID: 2678309
Heading Depth: 3
Heading Rank: 1

Heading: Millinery Center

Text: First, as the government concedes, the district court correctly found that the Supreme Court’s decision in Millinery Center Building Corp. v. Commissioner, 350 U.S. 456 (1956), did not abrogate Cleveland Allerton. On a set of facts similar to those in Cleveland Allerton, the Second Circuit refused to permit a deduction for a lease, which was bought out while acquiring real estate. Millinery Ctr. Bldg. Corp. v. Comm’r, 221 F.2d 322, 323 (2d Cir. 1955). The Supreme Court granted certiorari because of the “apparent conflict” between that decision and Cleveland Allerton. Millinery Ctr., 350 U.S. at 458–59. But the Court’s opinion turned on the petitioner’s lack of evidence that the rent under its lease was actually burdensome. See id. at 458–60. Absent such evidence, the Court concluded, the petitioner had to capitalize the entire purchase price. See id. at 460. Importantly, the Court did not decide whether a taxpayer could deduct the cost of buying out a burdensome lease because, in the facts before it, there was no burdensome lease. Rather, it left open the question before this court again today: “Whatever possible merit petitioner’s contention might have were there proof of excessive purchase price can await such a case.” Id. at 460. Thus, Millinery Center does not require us to modify Cleveland Allerton.