- 22 - The membership fees for Ridgemark Golf and Country Club increased from $700 in 1971, when Ridgemark was formed, to approximately $14,000 in 1990, when it was sold to the members. Petitioners deducted $292,773 for depreciation on Schedule F of their 1989 Federal income tax return with respect to certain farm property. Respondent determined that the depreciation deduction claimed by petitioners exceeded the allowable amount by $191,637. The parties agreed that the proposed adjusted capital gain of $213,993 would be reduced to $174,030. Petitioners have conceded the remaining adjustments. OPINION The parties agree that Ridgemark “exchanged” the unit 10 property for the Paicines property. The disagreement concerns whether the unit 10 property was held primarily for sale in the ordinary course of Ridgemark’s business. Respondent contends that Ridgemark was a real property dealer and that the exchange of the unit 10 property was merely a continuation of established subdivision activities. Ridgemark contends that the unit 10 property was sold to liquidate its assets, and that the offsite improvements were merely a condition of the sale. Petitioners bear the burden of establishing that respondent’s determination is erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Generally, section 1001(c) requires that gain or loss on the sale or exchange of property shall be recognized. SectionPage: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Next
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