- 26 -
loss. However, in computing the long-term capital loss,
it appears that respondent treated petitioner as having a
basis of $1,120,000 in the eight memberships, or $140,000
per membership, rather than a basis of $1,240,000, or
$155,000 per membership.
Annual Dues Issue
At the time petitioner purchased 9 of the 18 unsold
class A memberships in the club, he signed membership
documents identical to those signed by the other members.
He thereby obligated himself to pay the annual dues
attributable to each membership. As described by the
promotional booklet issued to prospective purchasers,
the dues covered various expenses, including insurance,
staff services, such as the manager's salary, and
maintenance costs incurred in running the club. According
to the booklet, the dues were estimated to be approximately
$4,000 for the first year. Based upon the eight class A
memberships that petitioner held during 1986, it would
appear that he was liable to pay $32,000 in dues during
the year.
On the Schedules E, Supplemental Income Schedule,
that are attached to petitioners' 1986 income tax
returns, each petitioner claims a deduction of $5,250
for "management fees" attributable to the beach club.
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011