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disallowed VRI’s allocation, under the alternative cost method,
of the total estimated costs of constructing the Golf Course and
the Clubhouse to VRI’s cost bases in the residential lots sold in
1994.
Shortly before trial herein was scheduled to take place,
however, respondent abandoned his contention that the Golf Course
and the Clubhouse constituted projects separate from VRI’s
development and sale of the residential lots. Respondent
acknowledged that the Golf Course and the Clubhouse constituted a
single project integrated with VRI’s development and sale of
improved residential lots. Respondent acknowledged that VRI
could allocate under the alternative cost method the estimated
costs of constructing the Golf Course to the lots sold.
Respondent, however, for the first time in a pretrial brief
contended that VRI had retained an ownership interest in the
Clubhouse in 1994 and through the transition period, and
therefore that the estimated construction costs of the Clubhouse
would have been recoverable to VRI through depreciation and did
not qualify under the alternative cost method for allocation by
VRI to the lots sold in 1994 and in subsequent years.
More specifically, with respect to VRI’s $13,390,624 in
total estimated construction costs of the Golf Course (all of
which related to nondepreciable improvements to the Property),
respondent acknowledged that those estimated costs qualified
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Last modified: May 25, 2011