Court Opinion

ID: 9466935
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:33:09.722433+00
Date Added: 2024-06-11T17:40:03.199015
License: Public Domain

PREGERSON, Circuit Judge
(dissenting):
I respectfully dissent. The evidence introduced by taxpayers demonstrates that when they filed their 1970 and 1971 income tax returns, they reasonably could estimate that the useful life of the depreciable improvements would be six years and two months. The buildings were designed and constructed in accordance with the state’s specifications. Their design made the buildings virtually useless for any other tenant. The zoning variance granted the project, which precluded commercial occupancy, was conditioned on continuous occupancy by governmental agencies. During negotiations for the lease, the state’s leasing agent told taxpayers that there was no “probable likelihood” that the state, would exercise its options to purchase the property or to renew the lease for an additional ten years, a forecast which proved to be correct. The taxpayers established that the improvements were suitable for use by a unique tenant, the state, and that taxpayers reasonably expected at the time they filed their returns that this tenant would use the facility for only six years and two months. The Tax Court’s decision upholding the Commissioner’s conclusion that the reasonable useful life of the improvements was thirty-two years is therefore clearly erroneous.