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under the alternative cost method and were properly allocated by
VRI to the lots sold in 1994 and in subsequent years.
With respect, however, to VRI’s $3,707,662 in total
estimated construction costs of the Clubhouse (all of which
related to depreciable improvements to the Property), respondent
concluded that VRI’s alleged retained ownership of the Clubhouse
before and during the transition period (during which time VRI
allegedly would have been able to recover its costs thereof
through depreciation) disqualified VRI from using the alternative
cost method to allocate to the lots sold the estimated Clubhouse
construction costs.
Further, respondent concluded that VRI’s $5,861,595 in
estimated future-period interest expense with respect to its debt
obligations relating both to the Golf Course and to the Clubhouse
did not qualify as estimated construction costs under the
alternative cost method and could not be allocated to the cost of
the lots sold.
Procedurally, petitioners do not object to respondent’s
change in position and to respondent’s new contentions regarding
VRI’s use of the alternative cost method for its estimated
Clubhouse construction costs and estimated interest expense
relating to the Golf Course and to the Clubhouse. Petitioners,
however, argue that respondent should have the burden of proof
regarding any underlying factual disputes relating to
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