David C. Hutchinson, et al. - Page 22

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          how much VRI had received in membership fees and regardless of              
          the amount of VRI’s losses in connection with operation of the              
          Clubhouse during the transition period.                                     
               Under the Contract, until transfer of title from the escrow            
          to VCI, VRI was required to fund any deficit and to retain any              
          net income from operating the Clubhouse.  VCI, however, during              
          the transition period had control over the amount of dues charged           
          to members, and VCI thereby largely controlled the income or loss           
          to be realized from operation of the Clubhouse.                             
               With regard specifically to a depreciable ownership interest           
          in property, in Commissioner v. Moore, 207 F.2d 265, 268 (9th               
          Cir. 1953), revg. and remanding 15 T.C. 906 (1950), the Court of            
          Appeals for the Ninth Circuit stated:                                       

                    It is not the physical property itself, nor the                   
               title thereto, which alone entitles the owner to claim                 
               depreciation.  The statutory allowance is available to                 
               him whose interest in the wasting asset is such that he                
               would suffer an economic loss resulting from the                       
               deterioration and physical exhaustion as it takes                      
               place. * * *                                                           

          See also Weiss v. Weiner, 279 U.S. 333 (1929); Geneva Drive-In              
          Theatre, Inc. v. Commissioner, 622 F.2d 995 (9th Cir. 1980).                
               In petitioners’ post-trial brief, petitioners accurately               
          summarize the transaction before us as follows:                             

                    VRI acquired the Project for a single purpose -- to               
               create (1) valuable homesites abutting a first-class golf              
               course and (2) valuable golf club memberships and to                   

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