David C. Hutchinson, et al. - Page 25

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               We regard use in the above settlement agreement of the term            
          “ownership” as simply protective and as not indicative of true              
          ownership of the Clubhouse.  We do not find this language from              
          the 1999 settlement agreement arising out of a legal dispute as             
          controlling with respect to ownership of the Clubhouse during the           
          transition period.                                                          

          Estimated Future-Period Interest Expense                                    
               In Rev. Proc. 92-29, sec. 4.01, 1992-1 C.B. 748, 750, in a             
          general explanation of the alternative cost method, reference is            
          made to the general capitalization rules and the interest                   
          capitalization rules of section 263A(f) as follows:                         

                    The alternative cost method does not affect the                   
               application of general capitalization rules to                         
               developers of real estate.  Thus, common improvement                   
               costs incurred under section 461(h) of the Code are                    
               allocated among the benefitted properties and may                      
               provide the basis for additional computations (e.g.,                   
               interest capitalization under section 263A(f)).                        

               Petitioners contend generally that (regardless of the above            
          specific reference in Rev. Proc. 92-29 to the continued                     
          application to developers of the general capitalization rules and           
          of the interest capitalization rule of section 263A(f)), the                
          history and purpose of Rev. Proc. 75-25 support their argument              
          that estimated interest expense should be included in the                   

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