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complete picture and identify factors leading to our decision
herein.
In United States v. Georgia R.R. & Banking Co., supra, the
corporate taxpayer had leased certain of its stock holdings to a
third party for 99 years in return for $600,000 annually.
Approximately 73 years into the lease, the taxpayer distributed
its reversionary interest in the stock to its shareholders as a
dividend in kind. Thus the corporation retained its present
right to the lease payments, while its shareholders received a
remainder interest in the stock itself. The taxpayer then sought
to amortize over the remaining term of the lease its adjusted
basis in the stock, after charging off that portion of basis
representing the transferred remainder interest. After noting
that the underlying property would not have been exhausted when
the lease finally terminated, the court held that the leasehold
the taxpayer had created was not depreciable, inasmuch as the
taxpayer had incurred no additional costs in obtaining it. The
court also concluded that the dividend distribution of the
reversion also did not make the retained "lease" a depreciable
asset. In the words of the court: "By distributing the
reversion in 1954, taxpayer did nothing more than split its
bundle of property rights into two parts. We cannot see how this
action on its part can result in a depreciable asset where none
previously existed, unless it made some additional investment."
Id. at 288.
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