Clarance rented office space to an attorney who left town before the lease was completed. The attorney left several bookcases and other improvements to cover the remaining rent. Clarance must include in income the value of the leasehold improvements to the extent of the remaining rent that was due.

Question

Quizplus · Accepted Answer

According to the tax law, the value of leasehold improvements received as compensation for unpaid rent must be included in the lessor's income to the extent of the remaining rent due. Therefore, Clarance must include the value of the improvements in his income up to the amount of the rent that was due.

Clarance Rented Office Space to an Attorney Who Left Town