- 50 -
the basic purpose of the Atrium was not the enhancement of the
adjoining properties so as to induce sales of those properties,
and we so find.10
4. Conclusion
Our finding with respect to the Bank's basic purpose renders
an analysis of the extent of the Bank's retained interest in the
Atrium unnecessary. In any event, we believe that such an
analysis would support our conclusion that cost recovery for the
Atrium should be independent of sales of the adjoining
properties. Although both the easements allowing ingress and
egress of pedestrians and the Bank's obligation to maintain and
operate the Atrium at its sole cost and expense for a period of
years restricted the Bank's ownership and control of the Atrium,
such restrictions did not prevent the Bank from entering into a
10 The fact that the Atrium has consistently generated net
operating losses does not change our conclusion. If the presence
of some profit is not always fatal to a taxpayer's case, we
believe then that the absence of profit is also not dispositive.
See Willow Terrace Dev. Co. v. Commissioner, 40 T.C. 689, 701
(1963), affd. 345 F.2d 933 (5th Cir. 1965); Colony, Inc. v.
Commissioner, 26 T.C. 30, 46 (1956), affd. per curiam 244 F.2d
75 (6th Cir. 1957); Bryce's Mountain Resort, Inc. v.
Commissioner, T.C. Memo. 1985-293; Montclair Dev. Co. v.
Commissioner, T.C. Memo. 1966-200. But more importantly, the
Atrium's operating loss figures do not consider the benefits (if
any) derived by the Bank when it entered into the commitment to
build the Atrium in 1981 as part of an integrated series of
agreements. We are unclear whether any possible benefits derived
by the Bank as part of those agreements, e.g., a favorable lease
agreement in 1UBC or enhanced Bank image derived from a prominent
complex bearing the Bank's name, would skew the significance of
those loss figures. Therefore, we have little confidence in the
import of those figures.
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