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(6th Cir. 1964), affg. T.C. Memo. 1963-1, and Stevens v.
Commissioner, 388 F.2d 298 (6th Cir. 1968). Godfrey v.
Commissioner, supra, concerned deductions that the taxpayer
claimed as to a joint venture in two parcels of real estate known
as the Goose Pond and Adams Packing properties. Before taking
title to the Goose Pond property, the taxpayer and his associates
caused a use survey to be conducted on the property in order to
ascertain its best commercial use. They concluded from the
survey that the upper part of the tract was best suited for an
automobile dealership and that the lower portion could best be
used for a shopping center. They acquired the property and then
discovered that it lacked the zoning classification necessary to
use it in the manner indicated by the survey. They retained
attorneys to try to change the property’s classification. Their
attempt was unsuccessful. The taxpayer deducted his
proportionate share of the cost of the survey and the attorney’s
fee. The taxpayer also deducted travel and living expenses that
he had paid in connection with acquiring both the Goose Pond and
Adams Packing properties.
We denied the deductions, holding that all of the
expenditures were capital expenditures. We observed that the use
survey “represented their first step in the contemplated
development of the property; and its benefits were obviously
expected to extend beyond the year in which the survey was made.”
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