William owns a building that is leased to Lester’s machine shop. Lester request that William rewire the building for new equipment Lester plans to purchase. The wiring would cost about $4000, but would not increase the value of the building because its only use is in connection with the specialized equipment. Rather than lost Lester as a lessee, William agrees to forgo one month’s rent of $1000 if Lester will pay for wiring. Because Lester does not want to move, he agrees. What amount, if any, must William include in gross income?
Reg. Sec. 1.109-1
CIR v. Grace H. Cunningham, 2 AFTR 2d 5511, 58-2 USTC 9771(9th Cir, 1958)