Richard L. Matz and Linda A. Matz, Deceased, Richard Lee Matz, Jr., Independent Executor - Page 9

                                                - 9 -                                                   

            Respondent determined that the loss is a long-term capital loss                             
            and that the interest paid is investment interest.  We agree with                           
            respondent.                                                                                 
                  Petitioners assert that they are entitled to ordinary loss                            
            treatment because petitioner was a coventurer in the Bridgepoint                            
            project, and that petitioner was in the trade or business of                                
            developing and promoting businesses.  Petitioners argue that                                
            petitioner's involvement in the Bridgepoint project was pursuant                            
            to this trade or business.  We have already rejected this                                   
            argument in our discussion of petitioners' loss regarding                                   
            Southern Express, and we incorporate our analysis on that issue                             
            here.4                                                                                      
                  Accordingly, we find that the $703,659 loss petitioners                               
            sustained with respect to Bridgepoint in 1986 is a capital loss                             
            and that $285,142 of interest petitioner paid in 1986 relating to                           
            Bridgepoint is investment interest.                                                         


                  4     Although petitioners state on brief that "The                                   
            Bridgeport [sic] Building transaction was not a direct investment                           
            in real property but a specially designed structure of financing                            
            for a build to suit office building" and "[Petitioner] entered                              
            into the Bridgepoint venture as part of his trade or business of                            
            developing and promoting businesses", petitioners also analogize                            
            the instant facts to S & H, Inc. v. Commissioner, 78 T.C. 234                               
            (1982).  In S & H, Inc. v. Commissioner, supra, the Court held                              
            that a transaction was a sale of property in the ordinary course                            
            of a taxpayer's trade or business and the gain thereon was                                  
            taxable as ordinary income rather than capital gain.  Petitioner                            
            did not own, and therefore did not sell, Bridgepoint.  We fail to                           
            see any reasonable analogy between the Bridgepoint facts and the                            
            facts and holding of S & H, Inc. v. Commissioner, supra.                                    




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011