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latest, October of 1984 when it made the final decision to
proceed with the Atrium's construction.”
3. Analysis
a. The Developer Line of Cases
In Country Club Estates, Inc. v. Commissioner, 22 T.C. 1283
(1954), the taxpayer transferred approximately 300 acres of land
and certain improvements located thereon to the Tuscon Country
Club (the Club). With the proceeds of a loan from the taxpayer,
the Club agreed to construct on the transferred property a first-
class country club that included an 18-hole golf course, club
house, and recreational facilities. The taxpayer anticipated
that the construction of the country club would enhance the value
of the surrounding property, which the taxpayer subdivided into
lots for sale. Relying on Commissioner v. Laguna Land & Water
Co., 118 F.2d 112, 117 (9th Cir. 1941), affg. in part and revg.
in part a Memorandum Opinion of the Board,3 the taxpayer argued
that the cost of the land transferred to the Club should be added
to the cost of the lots sold. The Court distinguished Biscayne
Bay Islands Co. v. Commissioner, 23 B.T.A. 731 (1931),4 despite
3 In that case, the Court of Appeals for the Ninth Circuit
affirmed the Board of Tax Appeals' determination that a taxpayer
should be allowed to deduct from the sales proceeds of certain
lots expenditures made for streets, drives, curves, and other
improvements, which benefited those lots.
4 In that case, the Board of Tax Appeals rejected the
taxpayer's contention that no part of the cost of construction
and development of an island subdivision should be allocated to a
(continued...)
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