I.R.C. § 1221

Tax Treatment Of Lease Terms Part 4: Lease Termination Payments From Tenant To Landlord

There are many issues which landlords and tenants must negotiate in commercial leasing transactions. In the first two parts of this article, which deals with the tax treatment of important lease terms, we discussed lease inducement payments and tenant construction allowances. In this part, we will conclude our discussion of lease termination payments.

Tax Treatment Of Lease Terms Part 4: Lease Termination Payments From Tenant To LandlordAs mentioned earlier in this series of blogs, there are two types of lease termination payments: (1) payments made by the landlord to the tenant and (2) payments made by the tenant to the landlord. Part three addressed payments made by the landlord to the tenant. This final section will consider lease termination payments made by a tenant to a landlord.

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