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cell tower lease buyout


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Like many tax issues, it depends on the facts and circumstances.  The concern is whether the income is capital or ordinary.

What exactly is the client selling?  if he/she is selling a future stream of income, based on present value calculations, it is ordinary income under the "substitute-for-ordinary income doctrine."   The courts have applied that doctrine to the sale of rights to lottery winnings.

If on the other hand, the taxpayer is selling a perpetual easement with exclusive rights to the land the tower sits on, that is the sale of a capital asset.


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