In a Tax Court case, Thomann v. Commissionerr,1 decided November 1, 2010, a farm landlord suffered the rejection of claimed deductions for expense method depreciation over a three-year period on the grounds of failure to meet the requirements for the “noncorporate lessor” rule.2 The tax deficiencies ($81,043) and penalties ($16,209) totaled$97,252 for amounts claimed on cash-rented land for the open years.3 Although the realestate in question was admittedly leased under a cash rent lease arrangement, which the court viewed as inconsistent with the terms of the “non-corporate lessor” rule, it appears likely that the deduction would also have failed on the grounds that cash rented assets generally fall short of being “. . . purchased for use in the active conduct of a trade or business” as is required for eligibility.4 The more significant issue is where the line is drawn between between cash-rent leases and share rent leases for purposes of claiming expense method depreciation. Certainly the Thomann case5 has focused attention on that issue as well as meeting the requirements under the “non-corporate lessor” rule.



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