Payments totalling $220,000 which the taxpayer made to various municipalities in order to obtain their acquiescence to its application to effectively terminate its obligation to provide passenger railway service in the area and instead provide bus service, were non-deductible capital expenditures. Locke J. stated (at p.1026):
"The franchises held by the appellant ... were capital assets. The payments in question were made to obtain relief from the obligation to maintain passenger service, an obligation which was resulting in heavy annual losses to the company, and the relief obtained ... substantially increased the value of the franchises to the appellant."