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Land Co. In Galt, the taxpayer wanted to lease his fairgrounds
for harness racing, and he obtained a zoning change for the
property to permit parking and the sale of beverages thereon.
The taxpayer in Galt then entered into a 20-year lease agreement
for his property and depreciated the cost of obtaining the
zoning change over the 20-year life of the lease. The Tax Court
noted that the zoning change affected the property beyond the
20-year term of the lease and held that the cost of the zoning
change was not depreciable because the zoning change produced
benefits of an indefinite and undeterminable duration. Galt v.
Commissioner, supra at 909-910. In contrast, in Chevy Chase
Land Co., the taxpayer unsuccessfully sought to have its land
rezoned in order to construct a Bloomingdale’s store. The
taxpayer in Chevy Chase Land Co. had previously reached an
agreement to lease the land to Federated Dept. Stores (the owner
of the Bloomingdale’s chain). This lease agreement was
contingent upon a favorable ruling on the rezoning application
for the land. After the rezoning application was denied,
Federated Dept. Stores terminated the lease agreement for the
land. The Tax Court allowed the taxpayer to deduct the costs of
the rezoning effort as an abandonment loss after Bloomingdale’s
transaction terminated since the Bloomingdale’s lease
transaction was contingent upon obtaining the rezoning. See
Chevy Chase Land Co. v. Commissioner, supra at 482-488. The Tax
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