- 5 -
building to house his antiques business. He looked at several
buildings and eventually narrowed his choices to two properties,
the Redwood City Fox Theater Building (the Redwood City Fox or
the property) in Redwood City, California, and the Stanford
Theater in Palo Alto, California.
In May 1981, Jacobs purchased the Redwood City Fox. He also
purchased personal property associated with the theater. He
chose the Redwood City Fox over the Stanford Theater because the
Redwood City Fox was in much better condition physically than the
Stanford Theater. Additionally, the Redwood City Fox building
included commercial space, both retail and office, adjacent to
the theater, which Jacobs wanted to utilize for his antiques
business. The purchase price for the Redwood City Fox and
associated personal property was $1,000,000,4 allocated $912,556
to the theater and commercial space and $87,444 to the personal
property.5
4 Jacobs believed he purchased the Redwood City Fox for a
good price because the prior owners "didn't have the money or the
desire or the knowledge * * * to fix it up, and they just wanted
* * * get rid of it." Jacobs considered the May 1981 sale of the
Redwood City Fox to be a "distress sale".
5 There is conflicting evidence in the record concerning the
purchase price of the Redwood City Fox and the associated
personal property. Jacobs testified he paid "somewhere around
$1,080,000." An appraisal of the Redwood City Fox prepared by
David Ingram Jr. and William J. Ewing at Jacob's request and
dated April 1987 indicates that Jacobs paid $1,090,344 to acquire
the property, allocated $399,146 to the land, $610,783 to the
building, and $80,415 to the equipment. The Ingram/Ewing
appraisal report also states that Jacobs was the source of this
(continued...)
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