William F. Owen, Jr. Gretchen K. Owen v. Commissioner Internal Revenue Service
Opinion
Opinion
Thompson, J.
William and Gretchen Owen appeal the tax court’s decision denying them certain investment tax credits and forcing them to recognize a taxable gain on a 1981 transfer of equipment. Owen v. Commissioner, 53 T.C.M. (CCH) 1480 (1987). We have jurisdiction under 26 U.S.C. § 7482 . We affirm.
I
FACTS
Over the years, William Owen participated in several business ventures with Stephen McEachron. In 1977, they formed a general partnership called McO Investment (“McO”), in which they were equal partners. In 1980, Owen and McEachron entered the seismic drilling business. They borrowed money to buy drilling equipment, secured the loan by the equipment, gave their personal guaranties to the lender, and placed title to the equipment in McO. They then leased most of the equipment to Western Exploration, Inc. (“Western”), a corporation in which they had equal ownership interests. Western conducted the seismic drilling operations.
The equipment leases from McO to Western generally were on a month-to-month basis, although some were modified to provide lease terms from day-to-day. None of the leases contained a fixed termination date. Each lease, however, was subject to cancellation by either…