This section contains the nature of the case and procedural background.

Starr's (P) plant installed a fire sprinkler system. P did this under a five-year lease with annual payments of $1,240. The lease agreement called for the five years of payments, but in paragraph 28 of that agreement, there was a renewal provision that after the five years P could renew the agreement at a rental rate of $32 per year. If P did not renew, then the lessor was granted the right for the following six months to remove the system. The contract was silent as to the 11th year. The Tax Court held that the lease payments were capital expenditures and only allowed depreciation of $269.60 per each year. Starr's estate appealed that decision.

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