- 16 -
The evidence in this case appears to reflect that during the
1989 through 1994 years, the preproductive period for citrus
trees was, generally, more than 2 years. It is evident that in
1989 when the corporation entered into the citrus growing
business it employed the latest technological advances.
Employing the most current technology, the corporation produced
only limited amounts of citrus from a limited number of its trees
within the first 2 years. We cannot assume that, nationally,
other citrus farmers had achieved the same technological state of
the art. It therefore appears possible, if not likely as argued
by respondent, that the nationwide average preproduction period
for citrus was more than 2 years.
The reports and testimony of the parties’ trial experts and
the reference sources provided by the parties also demonstrate
that the preproductive period for citrus plants was at least 2
years. A text on Florida citrus growing (received as Exhibit 23-
10(...continued)
deductions currently available against ordinary income and
eventual capital gain upon sale of citrus groves. This benefit
had resulted in “unfavorable economic consequences for the citrus
industry”, in the form of overproduction and depression of
prices. The capitalization requirement specifically addressed
that problem by requiring that the expenses be “charged to [the]
capital account” at least until the end of the third year after
the year of planting (4-year rule). The legislative history,
however, did not contain specific recognition of an established
or recognized preproduction period with respect to citrus trees.
Congress, however, may have set the 4-year period to coincide
with the then (1969 or 1986) preproduction period for citrus
trees. As evidenced in this case, however, the period may be
becoming shorter due to advanced farming technology.
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011