16 June 2009 Internal T.I. 2009-0312851I7 - Deductibility of Average Rent for Long Term Lease -- summary under Incurring of Expense

Escalating lease payments, which were deductible under GAAP on an average basis, would not give rise to a deduction for taxation purposes (to the extent of the excess of the average payment over the amount actually paid or payable in the taxation year) notwithstanding that such excess amount was credited to a liability account in the taxpayer's balance sheet, and was then assumed by a partnership on a transfer of a business division by the taxpayer to the partnership.