Ages v. MNR, 71 DTC 86 (TAB)

A partnership agreed to lease real estate under a lease that ran for 25 years, that provided for a yearly rental of $27,396 payable in monthly instalments, and that provided that during a period of approximately five years beginning shortly after the commencement of the lease, the lessee was entitled to acquire the property for a price equal to $710,000 minus 30% of all payments previously made under the lease. Mr. Fordham found that the exercise of this option over two years after the commencement of the lease could not result in 30% of the rent payments received up to that date being excluded from the taxpayer's income and stated (at p. 87):

"I know of no authority for the proposition that money received as rent initially can later be treated ... as having been paid on capital account by reason of a subsequent happening."

A partnership agreed to lease real estate under a lease that ran for 25 years, that provided for a yearly rental of $27,396 payable in monthly instalments, and that provided that during a period of approximately five years beginning shortly after the commencement of the lease, the lessee was entitled to acquire the property for a price equal to $710,000 minus 30% of all payments previously made under the lease. Mr. Fordham found that the exercise of this option over two years after the commencement of the lease could not result in 30% of the rent payments received up to that date being excluded from the taxpayer's income and stated (at p. 87):

"I know of no authority for the proposition that money received as rent initially can later be treated ... as having been paid on capital account by reason of a subsequent happening."