Stanley Burke v. Commissioner of Internal Revenue

This is a review of a decision of the Tax Court of the United States pursuant to 26 U.S.C.A. § 7482 . In its decision, 32 T.C. 775 , the Tax Court upheld the commissioner’s disallowance of a claimed abandonment loss in the year of 1950.

In 1950 petitioner Burke was a resident of North Sacramento, California. He filed his return reporting his income in accordance with the cash receipts and disbursements method.

In early 1946 Burke was approached by parties who desired that he invest money in the construction of a luxury hotel at Las Vegas, Nevada. He was requested to advance money to exercise an option and in return receive stock in the Nevada Desert Inn Corporation which had been organized to construct the hotel. The option for the purchase of the real property selected for the hotel site was about to expire. Burke arrang *488 ed to take an assignment of the option, acquired title in March 1946 and agreed to permit the original option holder to repurchase from him within six months.

Burke commenced construction of the hotel which proceeded through the spring and summer of 1946. By August the concrete foundations were in as well as some of the wooden framework for the dormitory.…

(concurring).

I concur. It is my belief that rarely, if ever, can a taxpayer, especially when real property is involved, place himself beyond an open question of fact on the issue of abandonment, and the time thereof, without destruction or detachment of the improvement. I do not understand how one abandons the title to an improvement to realty by his subjective decision to do so, even though he may advise his attorney and his accountant that he intends to do it.

283 F.2d 487 Stanley BURKE, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. No. 16611. United States Court of Appeals Ninth Circuit. October 31, 1960. Dermot R. Long, Los Angeles, Cal., for appellant. Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, Melva M. Graney, Charles B. E. Freeman, Attys., Dept. of Justice, Washington, D. C., for respondent. 1 Before CHAMBERS and HAMLIN, Circuit Judges, and POWELL, District Judge. 2 POWELL, District Judge. 3 This is a review of a decision of the Tax Court of the United States pursuant to 26 U.S.C.A. § 7482 . In its decision, 32 T.C. 775 , the Tax Court upheld the commissioner's disallowance of a claimed abandonment loss in the year of 1950. 4 In 1950 petitioner Burke was a resident of North Sacramento, California. He filed his return reporting his income in accordance with the cash receipts and disbursements method. 5 In early 1946 Burke was approached by parties who desired that he invest money in the construction of a luxury hotel at Las Vegas, Nevada. He was requested to advance money to exercise an option and in return receive stock in the Nevada Desert Inn Corporation which had been organized to construct the hotel.…