# 26 U.S.C. § 178: Amortization of cost of acquiring a lease

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s178>. Cite pinpoints as 26 U.S.C. § 178(a)(1).

## § 178(a) General rule

In determining the amount of the deduction allowable to a lessee for exhaustion, wear and tear, obsolescence, or amortization in respect of any cost of acquiring the lease, the term of the lease shall be treated as including all renewal options (and any other period for which the parties reasonably expect the lease to be renewed) if less than 75 percent of such cost is attributable to the period of the term of the lease remaining on the date of its acquisition.

## § 178(b) Certain periods excluded

For purposes of subsection (a), in determining the period of the term of the lease remaining on the date of acquisition, there shall not be taken into account any period for which the lease may subsequently be renewed, extended, or continued pursuant to an option exercisable by the lessee.

## Regulations

- [Treas. Reg. § 1.178-1](/26/reg/1.178-1.md): Depreciation or amortization of improvements on leased property and cost of acquiring a lease. (interprets § 178)

## Final rules

- [84 FR 9231](https://www.federalregister.gov/documents/2019/03/14/2019-03474/eliminating-unnecessary-tax-regulations) (2019): Eliminating Unnecessary Tax Regulations

## Leading cases

- [Buddy Schoellkopf Products, Inc. v. Commissioner, 65 T.C. 640 (1975)](https://www.courtlistener.com/opinion/4704188/buddy-schoellkopf-products-inc-v-commissioner/)
- [Uecker v. Commissioner, 81 T.C. 983 (1983)](https://www.courtlistener.com/opinion/4705939/uecker-v-commissioner/)
- [Gulf Tel. Corp. v. Commissioner, 52 T.C. 1038 (1969)](https://www.courtlistener.com/opinion/4702658/gulf-tel-corp-v-commissioner/)

## Amendments

- 1958-09-02: [Pub. L. 85-866](/26/act/85-866.md), 72 Stat. 1612
- 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2139
- 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3354