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Leasehold Improvements
From 1980 through the years at issue, petitioner was the
sole stockholder of Goshorn, a pipeline construction corporation.
In 1985, Goshorn had its principal offices at 52nd and Wadsworth
Boulevard in Denver, Colorado (Denver premises). However, due to
an urban renewal project, Goshorn's Denver premises were con-
demned and Goshorn was forced to relocate. Goshorn had several
criteria for the location of its new offices, including heavy
industrial zoning, adequate yard space for vehicles and equip-
ment, and office space.
Goshorn located three lots of real property at 5300 Eudora
Street in Commerce City, Colorado (Eudora property), which met
its criteria for a new location. The Eudora property could be
zoned to accommodate heavy industrial use, had ample yard space,
and had an existing house that could be used as an office.
Petitioner purchased the Eudora property for $500,000 in 1985.2
During 1987 and in later years, petitioner leased the third lot
(lot 3) to Goshorn for $5,000 a month. The leasing arrangement
was memorialized in a standard two-page lease that petitioner's
secretary purchased from an office supply store. Petitioner was
not able to locate the document at trial.
2Petitioner's accountant advised petitioner to purchase the
property and lease the land back to Goshorn Construction &
Pipeline, Inc. (Goshorn), in order to reduce any gain on a
subsequent sale of the property.
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