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Edward leases real estate to Janet for a period of 20 years. Janet makes capit

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  Edward leases real estate to Janet for a period of 20 years. Janet makes capital improvements to the property. When the lease expires, Edward reclaims the property, including the improvements made by Janet.

 

  1. Under current law, at what point does Edward recognize income as a result of Janet’s improvements?
  2. Has the law in part (a) always been the rule?
  3. What is the justification, if any, for the current rule?

 

 
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