Tanforan Co., Inc. v. United States

The Government appeals from the District Court’s determination that Tan-foran was entitled to certain tax deductions in 1963. Finding no error, we affirm.

Until 1964, Tanforan operated a race horse track in northern California. Toward the end of 1963, the directors of Tanforan concluded, for various reasons, that the company’s interests could best be served by closing the track it owned and leasing newer facilities at other tracks in the same area. Therefore, after the close of the 1963 racing season, the directors took steps to (1) abandon the track Tanforan then owned, (2) secure leases upon other race tracks, and (3) obtain state approval for Tanforan to operate the rented facilities. Although they made substantial progress toward their goal in 1963, it was not until early 1964 that all of the necessary arrangements were completed.

Because of that overlap, into 1964, the Revenue Service assessed a deficiency against Tanforan, contending that it could not deduct, in 1963, the entire un- depreciated cost of its race track assets. Tanforan paid the assessment and then instituted its suit in the court below, arguing that the events which occurred in 1963 were legally sufficient…