THE LAST OF HARRAH / Enough of Reno tycoon's car collection is left to fill a museum - SFGate THE LAST OF HARRAH / Enough of Reno tycoon's car collection is left to fill a museum Michael Taylor, Chronicle Auto Editor Published 4:00 am, Sunday, February 25, 2007 Photo: By Lance Iversen Close Image 1 of 4 MOTORXXMUSIUM_1036.JPG There are four authentic street scenes, representing each quarter of the 20th century, with facades, autos, artifacts and sounds from each era. One side of each street contains building facades and the other side a timeline of events and achievements chronicling the history and progress of the automobile. A 1938 Packard is one of the 230 cars on display at Bill Harrah�s National Automobile Museum in Reno are housed in what has to be called a spectacular building just a few blocks from his famous hotel-casino Harrah�s on Virginia Street in downtown Reno. AUGUST 3, 2006.

RENO.By Lance Iversen/San Francisco Chronicle MANDATORY CREDIT PHOTOG AND SAN FRANCISCO CHRONICLE/NO SALES MAGS OUT less MOTORXXMUSIUM_1036.JPG There are four authentic street scenes, representing each quarter of the 20th century, with facades, autos, artifacts and sounds from each era. One side of each street contains building ... more Photo: By Lance Iversen Image 2 of 4 MOTORXXMUSIUM_0992.JPG A 1914 Mercer 450 race Car powered by a 4-cylinder T-head 150hp engine is one of the 230 cars on display at Bill Harrah�s National Automobile Museum in Reno. The museum is housed in what has to be called a spectacular building just a few blocks from his famous hotel-casino Harrah�s on Virginia Street in downtown Reno. AUGUST 3, 2006.RENO.

By Lance Iversen/San Francisco Chronicle MANDATORY CREDIT PHOTOG AND SAN FRANCISCO CHRONICLE/NO SALES MAGS OUT less MOTORXXMUSIUM_0992.JPG A 1914 Mercer 450 race Car powered by a 4-cylinder T-head 150hp engine is one of the 230 cars on display at Bill Harrah�s National Automobile Museum in Reno. The museum is housed in ... more Photo: By Lance Iversen Image 3 of 4 MOTORXXMUSIUM_1039 There are four authentic street scenes, representing each quarter of the 20th century, with facades, autos, artifacts and sounds from each era. One side of each street contains building facades and the other side a timeline of events and achievements chronicling the history and progress of the automobile. A jeep Wagoner powered by a Ferrari engine is one of the 230 cars on display at Bill Harrah�s National Automobile Museum in Reno are housed in what has to be called a spectacular building just a few blocks from his famous hotel-casino Harrah�s on Virginia Street in downtown Reno.

AUGUST 3, 2006. RENO. By Lance Iversen/San Francisco Chronicle less MOTORXXMUSIUM_1039 There are four authentic street scenes, representing each quarter of the 20th century, with facades, autos, artifacts and sounds from each era. One side of each street contains building ... more Photo: Lance Iversen Image 4 of 4 MOTORXXMUSIUM_0989.JPG A visitor to the Bill Harrah�s National Automobile Museum in Reno takes a photograph of a 1908 Franklin powered by a 16HP air-cooled 4-cylinder engine. 230 cars are housed in what has to be called a spectacular building just a few blocks from his famous hotel-casino Harrah�s on Virginia Street in downtown Reno. AUGUST 3, 2006.

RENO.By Lance Iversen/San Francisco Chronicle MANDATORY CREDIT PHOTOG AND SAN FRANCISCO CHRONICLE/NO SALES MAGS OUT less MOTORXXMUSIUM_0989.JPG A visitor to the Bill Harrah�s National Automobile Museum in Reno takes a photograph of a 1908 Franklin powered by a 16HP air-cooled 4-cylinder engine. 230 cars are housed in what has ... more Photo: By Lance Iversen THE LAST OF HARRAH / Enough of Reno tycoon's car collection is left to fill a museum 1 / 4 Back to Gallery 2007-02-25 04:00:00 PDT Reno -- The 230 cars on display are great, let's make no mistake about that, but it is the eclectic nature of Bill Harrah's car-collecting brain, his innate curiosity and the manic nature of his hands-on collecting that are really the stamp of the National Automobile Museum . And the stamp comes in ways subtle -- and not so subtle.

To me, the most obvious and whimsical example of Harrah, the legendary casino tycoon who died in 1978 at age 67, is the Jerrari -- a combination Ferrari and Jeep Wagoneer. It's on display in a corridor between some of the museum's galleries. The story was that Harrah asked Ferrari to make him a four-wheel-drive vehicle because Harrah was having trouble getting over the hill to Lake Tahoe in style. (Harrah was not one for plebian transportation.) Ferrari said no. So Harrah had his mechanics stuff a V12 Ferrari engine into the engine bay of a 1977 Wagoneer and got himself a unique four-wheel-drive. Or almost unique. Although the museum's curator had no record of it, it appears Harrah had another Jerrari created from a 1969 Wagoneer. That one had the long sloping hood, the grille and the front fenders of a Ferrari 365 grafted onto the Wagoneer and, yes, it does look weird. The car cropped up recently on the Web site of Barrett-Jackson, the big Arizona auto auction firm. Jerraris, Ferraris.

There are many other cars worth seeing in the museum, which came about after Harrah died and his vast collection became the subject of huge controversy in the rarefied world of collector cars. Harrah had cobbled together some 1,450 cars that were in a collection of warehouses in nearby Sparks. The collection was open to the public and became known as the world's largest assemblage of collector cars. After Harrah died, Holiday Inns acquired the Harrah's casino and hotel empire. In the summer of 1981, after Holiday Inns said it was going to put the entire collection up for sale, there was a big brouhaha in Nevada over the possible loss of the collection. Nevada's then-Gov. Robert List even entered the fray, trying to stall the sale, possibly by getting the state's congressional delegation to enact some kind of car-saving legislation. At one point, Bay Area venture capitalist Thomas Perkins headed a group interested in acquiring the collection. In the end, all these efforts fell apart. But a nonprofit organization was formed, and this eventually led to the construction of the museum. Holiday Inns donated 175 Harrah cars and Harrah's vast research library to the group.

Private donations brought in another 60 cars. The museum opened in downtown Reno in 1989. As to the bulk of the original Harrah collection, the cars were sold off in three colorful auctions in the mid-1980s. Gone were the two Bugatti Royales, two of only six existing Royales, gone were the Duesenbergs and the Ford GT race car and gone were such outré items as the 1864 velocipede, the motorized San Francisco cable car and the motorized toboggan. "It's been like the breaking up of a family," Clyde Wade , director of the collection, said at the time. "We won't ever see the collection as it has been." True enough, but there's ample satisfaction to be had just from what is still here. Walking toward the first gallery, you go past the workshop, where cars are still fiddled with. It looks like a tiny version of Harrah's big workshop-cum-machine-shop out at the old Sparks buildings. In the first gallery are myriad 19th and early 20th century cars -- pristine, to say the least.

In a highlighted display is the 1907 Thomas Flyer, which won the 1908 around-the-world race, which was actually a New York-to-Paris race. "After traveling 12,427 land miles (over 22,000 miles overall, including sea voyages) in 170 days," the museum's Web site description of the car says, " George Schuster , the only crew member to travel the entire distance, drove this car into Paris to win the race." There's a fabulous 1921 Rolls-Royce Torpedo Body Silver Ghost whose name should have been changed given the application of new body cladding of solid copper sheets, 0.065 of an inch thick. It really stops you, given how the museum lighting bounces off it. The 1930s street gallery is an actual re-creation of a city street, replete with a movie theater whose marquee displays the new movie, "Gone With The Wind." Parked at the curb, among other period cars, are a blue 1938 Packard convertible and a blue 1930 Jordan seven-passenger touring car.

There's also the rather modest-looking green 1928 Ford Model A that actor Douglas Fairbanks bought for his wife, Mary Pickford . In fact, the museum has its own sprinkling of celebrity cars, but they hardly dominate the collection. There's Lana Turner 's 1941 Chrysler Newport Dual Cowl Phaeton , Frank Sinatra 's 1961 Ghia, and Elvis Presley 's 1973 Cadillac Eldorado. While most of the museum cars are simply displayed on sandy-colored stuff that looks like pebbles, a few are in their own settings -- a baby blue 1954 Buick Skylark convertible is ensconced in what looks like a period service station bay, replete with old oil cans and tools. On a more modern note, the museum's lobby currently has on display -- and you should check to make sure they're still there -- some of the fabulous cars built by Ed "Big Daddy" Roth . Smack in the middle of the lobby is the 1994 Beatnik Bandit II, a sister ship to the famous radical bathtub-like car Roth made more than 30 years earlier.

The cars are given new currency by the recently finished movie, "Tales of the Rat Fink," a film about Roth. The museum It's at 10 S. Lake St., Reno. Hours are Monday-Saturday, 9:30 a.m. to 5:30 p.m.; Sunday, 10 a.m. to 4 p.m. Admission: adults, $9; seniors (62 and over), $7; juniors (6-18), $3; children 5 and under, free. The museum is closed on Thanksgiving and Christmas Day.

More information from (775) 333-9300; or visit the museum's Web site, $28.8-Million Deal One of Biggest Ever : Lyon Buys 82 Cars From Famed Harrah's Collection - latimes YOU ARE HERE: LAT Home → Collections $28.8-Million Deal One of Biggest Ever : Lyon Buys 82 Cars From Famed Harrah's Collection January 03, 1987 |MARY ANN GALANTE | Times Staff Writer Orange County developer William Lyon has bought 82 cars from the famous Harrah automobile collection for $28.8 million, doubling the value of his own classic car collection, Reno-based Harrah's said Friday. Lyon's purchase, believed to be one of the largest acquisitions of its kind in history, includes a 1931 Bugatti Royale Coupe de Ville--one of only six built and regarded by many classic auto experts as the most valuable car in the world. The sale is the fourth--and probably the last--of the Harrah collection.

Before his death in 1978, William Fisk Harrah, founder of the casino and restaurant business that bears his name, had acquired 1,800 classic autos--a collection believed at one time to be the largest in the world. When Holiday Corp. bought Harrah's in 1980, the car collection was included. "The car collection wasn't self-supporting," Gene Evans, marketing director of the William F. Harrah Automobile Museum, said Friday. The museum is situated in Sparks, Nev., just east of Reno. In three previous sales of cars from the collection, Harrah's, now a subsidiary of Memphis, Tenn.-based Holiday, has grossed about $40 million, Evans said. The new sale to Lyon did not include another 75 cars and two antique planes--a World War I 1917 Jenny and a 1937 Aero Sport. Those vehicles are to be donated to the William F. Harrah Automobile Foundation, which will keep the cars on display in the Reno area. Announcement of Lyon's purchase came in the same week that auto racing enthusiast Briggs Cunningham sold his 71-car collection of historic automobiles and permanently closed his automotive museum in Costa Mesa.

The buyer of that collection, a collector in Palm Beach, Fla., will be moving the collection to an automotive museum now under construction in his state. Major Southland Builder Lyon, until last month, was chairman and the largest shareholder of AirCal. He and a partner sold the airline to American Airlines for $225 million in November. An intensely private man and antique car buff, Lyon, 63, is a major Southern California builder and chief executive of William Lyon Co. His present collection of 35 classic autos is valued at roughly $26 million and includes actress Dolores del Rio's 1930 Duesenberg SJ Murphy Town Car and a 1935 Model SJ Walker-LeGrande Duesenberg. Lyon could not be reached Friday but his accountant, Stan Ross of Kenneth Leventhal & Co. of Los Angeles, said he suspects that Lyon will display the cars. If Lyon does publicly display the cars in California, it will be a departure from his previous way of operating. While some of his cars have occasionally been displayed at auto shows, he typically has been reticent about revealing the scope of his collection. Lyon is an unusual collector of vintage cars because he regularly drives the vehicles.

"My attitude is that these cars originally were made to be driven, so I put them to their intended purpose," he said in an interview last fall. "If I couldn't drive a car, I wouldn't want it." Part of the condition of the sale, which was completed Dec. 31, was that the buyer would permit five of the rarest cars to continue to be displayed in the Reno area some of the time for the next seven years. "It's to appease the natives," Evans said, explaining that Harrah's plans to dispose of the vehicles have been a source of public irritation and outcry in Reno for the past several years. The five cars: - 1931 Bugatti Royale Coupe de Ville, which Harrah's reportedly valued at a minimum of $12 million. - 1929 Duesenberg Dual-Cowl Phaeton that was used in the motion picture "Annie." - A rare 1929 Mercedes-Benz Drop Head Coupe. - 1929 Miller Indianapolis race car that became a prototype for later models. - 1933 Duesenberg SJ Boattail Speedster that has only 1,750 miles on its odometer.

MORE: Harrah's Donates Historic Collection to UNLV | News Center | University of Nevada, Las Vegas University of Nevada, Las Vegas Home » Releases » Harrah's Donates Historic Collection to UNLV Harrah's Donates Historic Collection to UNLV From the Archives Please note that this release is more than two years old and details may have changed since the publish date. For inquiries, contact the the media relations office . Oct 15, 2003 | By UNLV Media Relations Media Contact: Diane Russell at UNLV at 895-0894 or David Strow at Harrah’s at 407-6530 Harrah's Entertainment, Inc., the Las Vegas-based gaming company, will formally donate its extensive corporate archives, including hundreds of photographs, publications, documents, and artifacts, to UNLV at an Oct. 23 news conference. The 5 p.m. event will take place in the special collections section of UNLV's Lied Library. Special collections, which will house the archives, is located on the third floor. Phil Satre, Harrah's chairman of the board, will present the archives to UNLV President Carol C. Harter.

The collection, now known as "Harrah's Archive," is part of the Gaming Studies Research Center based in special collections. "This is a wonderful collection for UNLV to receive," said Peter Michel, director of special collections. "It is eclectic in nature. We have celebrity and entertainment memorabilia, financial reports, publicity and advertising files, corporate communications, newspaper clippings, film, videotape, and a variety of promotional items carrying the company logo. "These items represent 65 years of gaming history and will serve to enhance UNLV's position as an international center for the study of gaming and the gaming industry," Michel said. The collection also contains extensive material about founder William Harrah's large antique car collection and his personal historical game and card collections. "We are proud to share our company's rich history with the people of Nevada," Satre said. "The story of Nevada's gaming industry cannot be told without our company's founder, Bill Harrah. These archives provide an intriguing look at his life and the legacy of the company he created." Harrah's began humbly in 1937 when Harrah opened a bingo parlor in Reno. Harrah's went on to play a significant role in the development and defining of gaming resorts over the years.

Today, it is one of the nation's largest gaming companies, operating 26 casinos in 13 states, including seven in Nevada. The company's affiliation with UNLV precedes the donation of the archives. The two entities have had a solid relationship for many years; the university's William F. Harrah College of Hotel Administration is named in Harrah's honor. Reader snapshots: At Harrah's in South Lake Tahoe, 1966 - Old Cars Weekly Old Cars Weekly ATTENTION IOLA OLD CAR SHOW ATTENDEES! Enter your e-mail address to receive a FREE muscle car download, cool wallpapers, and informative newsletters from OCW and partners. * By: admin | May 13, 2009 [Editor’s Note: Kenneth R. Unger, a C.P.A. and car enthusiast from Chandler, Arizona sends these photos to share with fellow readers of Old Cars Weekly. They are from a 1966 Harrah’s antique car show in South Lake Tahoe, Nevada. Kenneth offers this background about the photos.] “As a college student in the mid 1960’s at Arizona State University I had the wonderful opportunity to work for Harrah’s Club during the summer months.

Harrah’s would actually send recruiters to numerous college campuses scouting for summer employees at South Lake Tahoe, Nevada. Those older than 21 could work in the casinos. Harrah’s, Harvey’s and other casinos hired many college students. “Generally, Harrah’s operated about one-fifth of its gaming tables during the fall, winter and spring seasons, but opened up all tables for the summer season. The tables were staffed with summer employees who completed a 10-day to 2-week dealer training program. If a person was over 18 but under 21, they would be assigned restaurant or gift shop type of work. “As an over-21 accounting major I worked in the money count-room counting the drop from the tables and the restaurant and bar banks. I also worked overtime when needed as a casino cashier, dealing with all sorts of customers. “As most car enthusiasts know, Bill Harrah was a great car collector, building the largest antique and classic car collection based in Sparks, Nevada just outside of Reno. Employees were granted discount passes to the collection and I managed to go through the numerous buildings in Sparks many, many times during the three summers I spent at Tahoe. I never had the opportunity to meet Mr.

Harrah (we employees were told to address him as "Bill" if we did), but I have acquired many friends over the years who did get to know him and even bought, sold and traded cars with him in the 1950’s and 1960’s. Some even worked for him in the collection at a very early age. Bill Harrah passed away in June 1978 and his life story makes very interesting reading. “Outside the entrance to one of the main warehouse buildings, was a restored antique popcorn wagon which is shown [here]. My "boss" from Harrah’s, Bob Cranmer, is standing on the left. This antique popcorn wagon was looking good back in 1966 but later fell in disrepair. Kenneth chanced to meet the new owner recently and was able to show him what the popcorn wagon looked like in its glory years. “Recently on a antique car tour in Paso Robles, California, I became friends with a gentleman that told me he had recently acquired this wagon in a state of disrepair and I informed him that I might just have a photo of the unit outside of Harrah’s Collection I took back in 1966.

I located the photo and sent him 8" by 10" copies along with the other photos that were of a Harrah’s antique car show held in the South Lake Tahoe parking lot during the summer of 1966.” If you have snapshots you would like to share, please e-mail them to: oldcars@krause.com OR, CLICK HERE to post them directly online in our Old Cars Weekly forums CATEGORIES HARRAH'S CLUB v. UNITED STATES | 661 F.2d 203 (1981) | Leagle.com 661 F.2d 203 (1981) HARRAH'S CLUB v. The UNITED STATES. United States Court of Claims. September 23, 1981. Attorney(s) appearing for the Case John P. Sande, III, Reno, Nev., atty. of record, for plaintiff. James L. Malone, III, Washington, D. C., with whom was Acting Asst. Atty. Gen. John F. Murray, Washington, D. C., for defendant. Theodore D. Peyser, Jr., Washington, D.

C., of counsel. Before DAVIS, NICHOLS and BENNETT, Judges. OPINION PER CURIAM: This case comes before the court on plaintiff's withdrawal of notice of intention to except and request, filed August 3, 1981, that the court adopt as the basis for its judgment in this case, the recommended decision of Trial Judge David Schwartz, filed May 22, 1981, pursuant to Rule 134(h). Upon consideration thereof, without oral argument, since the court agrees with the trial judge's recommended decision, as hereinafter set forth * , it hereby grants plaintiff's request and adopts the recommended decision as the basis for its judgment in this case. Accordingly, plaintiff is not entitled to recover, and the petition is dismissed. OPINION OF TRIAL JUDGE SCHWARTZ, Trial Judge: The issue in this suit for a refund of income taxes is the propriety of the deduction from gross income, as a current expense or as an allowance for depreciation, of the taxpayer's costs of restoring antique automobiles. The taxpayer, plaintiff Harrah's Club of Reno, operates hotels and gambling casinos in Reno, Nevada.

To attract patrons, taxpayer maintains a museum of antique automobiles and other vehicles, known as Harrah's Automobile Collection (HAC). Approximately 1,000 antique vehicles are exhibited, many of them restored to original or near original condition. HAC employs 150 people, and is housed in a 10-acre complex which includes showrooms, restoration workshops and an extensive research library for use in restoration planning. The HAC is successful in its intended purpose. Almost 200,000 persons visited it during taxpayer's fiscal year 1971, the year involved. HAC vehicles, moreover, occasionally participate in antique auto races or are otherwise displayed in competitions for appearance and perfection in restoration. The 94 restored vehicles whose costs are involved in this case are often the subject of widely publicized photographs. All this brings much publicity for taxpayer's enterprises. The restoration of antique autos seeks to replicate original appearance. The most elaborate restoration recreates the original automobile in every particular, including operational ability. The restorations whose costs are in issue are so detailed and painstaking, taxpayer says, that the total cost of the restored vehicle is greater than its market value.

The Government does not dispute this proposition, and it is accepted, although the assumed market would seem to exclude those who might believe that the publicity value of such highly restored cars and the recognized premium value of HAC-restored cars compensate for their excess of cost over market value. If there are no such buyers, it may be that there is no market for cars restored in the HAC manner. In any event, the issue is the proper tax treatment of the excess of total restored-vehicle costs over market value. Taxpayer contends that these "excess restoration costs" are deductible as a business expense in the year of the restoration, and if not, then they are depreciable in five, or at most ten years. Alternatively, it is urged that the Commissioner, having agreed to a settlement in earlier years on the basis of depreciation of the excess restoration costs, is estopped now to argue otherwise. Trial of the case included a viewing of the HAC premises and the vehicles on display, among them many of the cars in issue, testimony as to individual restorations and expert testimony on valuations and restorations generally. Detailed findings of fact and conclusions of law have been made, and accompany this opinion. Those relevant to the decision are stated herein.

On the basis of the findings and conclusions, the taxpayer's contentions are for the reasons which follow rejected, and the complaint is dismissed. I The Claim of Estoppel The estoppel argument may be summarily disposed of. The agreement with the Commissioner, said to create an estoppel, related to years earlier than 1971. No agreement was made bearing on tax consequences in the taxpayer's fiscal year 1971, the year presently involved. Taxpayer's accountant conceded this on the stand; no agreement purporting to work an estoppel was put in evidence. It is settled that each tax year is another matter and that the Commissioner may challenge in a succeeding year what he condoned or agreed to in a former year. Automobile Club of Michigan v. Commissioner, 353 U.S. 180 , 77 S.Ct. 707, 1 L.Ed.2d 746 (1957); First National Bank of New York v. United States, 214 Ct.Cl.

585, 596-98, 557 F.2d 1379 , 1386-87 (1977); Union Equity Cooperative Exchange v. Commissioner, 481 F.2d 812 (10th Cir. 1973), cert. denied, 414 U.S. 1028, 94 S.Ct. 457, 38 L.Ed.2d 321 (1973); 10 Mertens, Law of Federal Income Taxation, § 60.14. II Deductibility as Current Expenses of the Excess Restoration Costs Taxpayer maintains that the excess restoration costs are current expenses of repair, deductible as ordinary and necessary expenses under section 162 of the Internal Revenue Code. The precise contention is that the difference between basis, i. e., original cost plus costs of restoration, and market value after restoration — which taxpayer calls "excess restoration costs" — is the cost of an ordinary repair and therefore a deductible business expense. This proposition is without support in tax code or case law.

Section 263 of the Code, on capital expenditures, prohibits deductions for "[a]ny amount paid out ... for permanent improvements or betterments made to increase the value of any property." Deductible repair costs are defined in the regulations as "[t]he cost of incidental repairs which neither materially add to the value of the property nor appreciably prolong its life, but keep it in an ordinarily efficient operating condition." Conversely, "[r]epairs in the nature of replacements, to the extent that they arrest deterioration and appreciably prolong the life of the property" may not be deducted, but are to be capitalized and depreciated in accordance with section 167 of the Code. Treas.Reg. § 1.162-4 (1958). 1 By the test of the foregoing descriptions of what is and what is not a deductible expense, the costs of the restorations here involved are not deductible costs of repair, but capital items, nondeductible except insofar as they are depreciable. The HAC restorations involve extensive showroom-or-better quality replacements and additions of body, engine, upholstery, lights and paint. Each restoration is preceded by historical research into the specifications of the original vehicle.

Restoration is then carried out with meticulous attention to every detail revealed in the research, at great cost. Upholstery and paint are reproduced as they were originally. Entire portions of the body and engine, down to individual engine parts, are renewed, to the extent of making castings from borrowed samples of parts whose replacements cannot be found; the taxpayer's word for this last is "remanufactured." HAC restorations have such an excellent reputation for quality that they add a premium value to the HAC-restored vehicle. These restorations are held to be "permanent improvements or betterments" which are made to increase the value (§ 263, I.R.C.) and which in fact do "materially add to the value" of the vehicles. They are also "in the nature of replacements," for they "arrest deterioration and appreciably prolong the life" of the vehicles. Treas.Reg. § 1.162-4, note 1. Better methods for arresting deterioration are used in the restoration than were used in the original manufacture.

By no stretch of imagination can the restorations be described as the "incidental repairs" deductible under section 1.162-4 of the regulations as intended to "keep [the vehicle] in an ordinarily efficient operating [i. e., pre-restoration] condition." Note 1. Before restoration, the vehicles are old cars in every state of dilapidation. On restoration they become strikingly handsome antiques in mint condition, in appearance or in every respect, mechanical and otherwise. Before restoration they were admittedly capital assets and on restoration they are doubly capital assets because they have been very substantially improved, bettered, increased in value and given a prolonged life. Accordingly, the costs of restoration, whether bringing the vehicle's total cost above or below its value in the market, cannot be deducted, and must rather be capitalized. III Depreciation of the "Excess Restoration Costs" If not deductible, the taxpayer argues alternatively, then the "excess restoration costs" should be held depreciable over the period in which the restoration can be estimated to be useful in the business of the taxpayer.

Depreciation, in tax law, is "the exhaustion, wear and tear, and obsolescence of property used in the trade or business" of the taxpayer. The depreciation deduction is the annual reasonable allowance for such exhaustion, wear and obsolescence. The aggregate of the depreciation deductions is the difference between cost or basis and salvage value at the end of the estimated useful life of the depreciable property. I.R.C. § 167(a); Treas.Reg. § 1.167(a)-1 (1964). 2 Taxpayer would separate the excess restoration costs, said to be a "separate and identifiable asset," from the remainder of the restoration costs and from the cost of the unrestored vehicle. Then, on the basis of testimony by its promotion manager, taxpayer ascribes to this identified asset an estimated useful life of five, or if not five, then ten years. Only the first of several difficulties with this argument is that the excess restoration costs are not an asset capable of separation from the rest of the costs or the unrestored vehicle. Costs, of course, are not an asset. As for the restoration itself, it pervades the vehicle. Moreover, each restoration is different.

Some restorations replace body parts or frames, some floor boards, some upholstery, fenders, engine covers, lights, tires, paint. Most or all replace a unique combination of these elements. Once accomplished, a restoration cannot be severed from the vehicle. Nor can it be separately identified. In this respect, a restoration is wholly unlike an identifiable component of a building such as a plumbing or electrical system, as in Shainberg v. Commissioner, 33 T.C. 241 (1959). Further, neither the restored vehicle nor its restoration has a useful life, in taxpayer's business, capable of being estimated. Under the regulation on depreciation, a useful life capable of being estimated is indispensable for the institution of a system of depreciation. Treas.Reg. § 1.167(a)-1(b) (1964). Property with an indeterminate life is nondepreciable. Niagara Mohawk Power Corp. v. United States, 207 Ct.Cl. 576, 585, 525 F.2d 1380 , 1386 (1975), reh. denied, 207 Ct.Cl.

594 (1976). Restoration increases indefinitely the life of an antique car. One vehicle restored 30 years ago is on display at HAC, without deterioration beyond the need for replacement of tires. No restored car in the Collection has ever needed re-restoration, been withdrawn from display because of deterioration or is likely to be so withdrawn. None has been sold, with one exception for a duplicate no longer desired. Even unrestored vehicles have without deterioration been on display at the Smithsonian Institution, in a harsher environment than HAC's showrooms, for 40 to 50 years. Those few HAC cars occasionally entered in actual races are rarely so used and are, before and after the race, given ordinary repair and maintenance. Any damage to restored cars in connection with competitions of antique autos is a matter for repair, not depreciation. Taxpayer has stopped the occasional use of a few restored cars to transport important patrons to and from the Collection; findings cannot be made as to the duration of the practice or its effect. The evidence establishes that there is no limit on the useful life of a restored car or other vehicle as a museum object.

There is good reason to believe that the 94 restored vehicles involved in this case will, with only normal maintenance, have an indefinite life in the taxpayer's trade or business, a museum. The vehicles are kept in a humidity-controlled environment and need remarkably little repair or maintenance beyond occasional mending of a crack in a wood part. This is not to say that the vehicles will last forever. It is to say that no limit can be put on the use of the vehicles as museum objects, and thus that the period over which the asset may reasonably be expected to be useful to the taxpayer in his trade or business is indefinite. See Treas.Reg. § 1.167(a)-1(b). No credible evidence supports the assertions of ten-year and five-year estimates of useful life. The ten-year estimate is not based on any hard facts, and is contradicted by the abundant evidence as to the longer lives of restored vehicles in museums.

The five-year estimate is based on no more than the remark of a promotion manager that after four or five years of intensive exposure of a car, "it can take its place in the museum and we'll take something else." The shift from one car to another for promotional use, possible because taxpayer has an abundance of choices, does not prove the loss of promotional value of the replaced car. Moreover, the witness did not mean to deny the continuing life as a museum display object, which is taxpayer's primary use of the vehicles. Recognition of both a short promotional life and a long museum life would presumably require a division into two parts of the basis of the restored vehicle, and different periods of depreciation for the same asset as useful in taxpayer's business for different purposes. Such a bifurcation would create a phenomenon unknown in tax law. Even if conceivably valid, there is no basis in the record for an allocation as between the asset as a museum display object and as a promotional object. A variation on the assertion of a short life is that excess restoration cost is an intangible, to be depreciated over its five-year life as a promotional asset.

In taxpayer's words, "This analysis reconstitutes the restoration costs into the price not for paint, leather, wheel bearings, etc., but for a promotional display with a useful life derived from novelty, perfection and other attributes appealing to the public for off-site and periodical promotion." The value, that is, the novelty, is said to be exhausted in five years "and then [taxpayer continues] the vehicle is reduced to a shopworn but otherwise authentic representation of the original version of nuts, bolts and paint comprising an operable vehicle." No amount of such fanciful "reconstitution" can change a restored car or a restoration into an intangible. The tangible quality of the restoration is graphically described by taxpayer itself, in its argument for an investment credit: "The restoration ... consists of placing new tangible property on old tangible property; viz., a new fender ... on an old vehicle, ...." etc. 3 The assertion of a five-year life, even as a promotional device, has already been commented on. The vehicle is at no time, much less in five years, reduced to a shopworn condition.

Once the useful life of the vehicle as an asset used in taxpayer's business is seen to be indefinite, the asset of course cannot be given a salvage value as of the end of an estimated period of usefulness. Salvage is the amount realizable at the end of the useful life in taxpayer's business. These vehicles will have as much, if not more, value in the future as now. Without a salvage value, there can be no allowance for depreciation. The taxpayer seeks to avoid the problem of a salvage value with the remarkable statement that "Since [the] excess restoration costs have no value when completed they can have none when exhausted ten years hence. Thus the salvage value of the excess restoration costs, constituting a separate and identifiable asset, is zero." Taxpayer has itself contradicted this assertion. Speaking of these same excess restoration costs, taxpayer says, "This is a value which [taxpayer] creates for its own use, which it does use, and which is usable particularly by itself." Again, "The value is a promotional value, of particular and unique use to a business which cannot advertise its principal source of revenue, gaming, in its principal markets." The excess restoration costs have, indeed, a double value.

As a part of the restoration costs, they matter-of-factly increase the value of the unrestored car by making it a more attractive display, better able to draw patrons to taxpayer's hotels and casinos. (The trial judge found the restored cars fascinating.) And by the very extravagance or excessiveness of their costs, the restorations add a cachet to the HAC vehicles and thereby further promote the taxpayer's business. Barnum was neither the first nor the last to exploit the drawing power of the phrase, "Brought to you at g-r-r-r-reat and untold cost." Another contention of the taxpayer, mentioned and then seemingly withdrawn, is that the entire cost of restoration, not merely the excess restoration costs, is depreciable. The ground offered is that after five or ten years, the salvage value of the entire restored car is zero. This contention, if made, is rejected on the grounds already stated concerning the salvage value of the excess restoration costs. Given the indefinite life of the restored vehicles, if a value at the end of the period of usefulness were to be stated, it would be the same value as at the beginning.

Values of these restored vehicles, incidentally, have steadily increased to the tax year involved, 1971, and as of that time were expected by the expert witnesses to continue to increase. For all these reasons, a depreciation allowance deduction for the excess restoration costs is out of the question. None of the contentions advanced by taxpayer in support of its claim for a refund has merit. The complaint should be dismissed. CONCLUSION OF LAW Upon the findings of fact and the foregoing opinion, which are adopted by the court, the court concludes as a matter of law that plaintiff is not entitled to recover and the petition is dismissed. FootNotes * Although the court adopted the trial judge's separate findings of fact, which are set forth in his report, they are not printed herein since such facts as are necessary to the decision are contained in his opinion. 1. Treas.Reg. § 1.162-4 (1958) provides: "Repairs.

The cost of incidental repairs which neither materially add to the value of the property nor appreciably prolong its life, but keep it in an ordinarily efficient operating condition, may be deducted as an expense, provided the cost of acquisition or production or the gain or loss basis of the taxpayer's plant, equipment, or other property, as the case may be, is not increased by the amount of such expenditures. Repairs in the nature of replacements, to the extent that they arrest deterioration and appreciably prolong the life of the property, shall either be capitalized and depreciated in accordance with section 167 or charged against the depreciation reserve if such an account is kept." 2. § 1.167(a)-1 Depreciation in general. "(a) Reasonable allowance. Section 167(a) provides that a reasonable allowance for the exhaustion, wear and tear, and obsolescence of property used in the trade or business or of property held by the taxpayer for the production of income shall be allowed as a depreciation deduction.

The allowance is that amount which should be set aside for the taxable year in accordance with a reasonably consistent plan (not necessarily at a uniform rate), so that the aggregate of the amounts set aside, plus the salvage value, will, at the end of the estimated useful life of the depreciable property, equal the cost or other basis of the property as provided in section 167(g) and § 1.167(g)-1. An asset shall not be depreciated below a reasonable salvage value under any method of computing depreciation. However, see section 167(f) and § 1.167(f)-1 for rules which permit a reduction in the amount of salvage value to be taken into account for certain personal property acquired after October 16, 1962. See also paragraph (c) of this section for definition of salvage. The allowance shall not reflect amounts representing a mere reduction in market value. See section 179 and § 1.179-1 for a further description of the term `reasonable allowance.'" 3. The argument for an investment credit urges tangibility as follows: "First, the restoration in itself is tangible personal property.

It consists of placing new tangible property on old tangible property; viz., a new fender will be placed on an old vehicle, or new wheel bearings will be placed in the wheels of an old vehicle, or new pistons will be placed within the rebored cylinders of an old motor block, complete with new pistons rings, new connecting rods, and perhaps a new crank-shaft. Also, new tires will be placed on old wheels, new paint will be placed on an old body, and labor will be employed both to make the new tangible object and to put it in place in or on the vehicle. Thus the entire restoration cost is for new tangible property which is either constructed by the taxpayer or purchased by the taxpayer and put in or on the vehicle by the taxpayer's employees." Comment Harrah's | Hotels & Casinos in Las Vegas, Atlantic City and more From business meetings to intimate gatherings, Harrah’s can coordinate your ideal venue needs. BUSINESS MEETINGS From large groups to intimate gatherings, we provide the ideal meeting space to fulfill your planning needs. WEDDINGS Celebrate your special day with style and elegance at one of our wedding chapels.

GROUP GETAWAYS Round up your friends and we’ll create a personalized itinerary based on the occasion and your personal interests. ABOUT HARRAH'S At Harrah’s, playtime is never over. It keeps on going. Harrah’s offers a fun gaming atmosphere, world-class entertainment and warm, welcoming room accommodations. In a setting that’s friendly, lighthearted and exciting, Harrah’s invites you to come out and play. HARRAH'S

Question: In which state is Harrah's Auto Collection situated?
Answer: Nevada