Highland Hills Swimming Club, Inc. v. Wiseman, 6072.
| Court | United States Courts of Appeals. United States Court of Appeals (10th Circuit) |
| Citation | 272 F.2d 176 |
| Docket Number | No. 6072.,6072. |
| Parties | HIGHLAND HILLS SWIMMING CLUB, INC., a corporation, Appellant, v. Earl R. WISEMAN, District Director Internal Revenue, Appellee. |
| Decision Date | 17 November 1959 |
272 F.2d 176 (1959)
HIGHLAND HILLS SWIMMING CLUB, INC., a corporation, Appellant,
v.
Earl R. WISEMAN, District Director Internal Revenue, Appellee.
No. 6072.
United States Court of Appeals Tenth Circuit.
November 17, 1959.
Ram Morrison, Oklahoma City, Okl., for appellant.
James P. Turner, Atty., Dept. of Justice, Washington, D. C. (Charles K. Rice,
Before PICKETT and BREITENSTEIN, Circuit Judges, and KNOUS, District Judge.
KNOUS, District Judge.
This was an action brought by the Highland Hills Swimming Club, Inc.1 against the District Director of Internal Revenue for a refund of taxes paid in the fiscal years 1954 and 1955.
The facts are largely undisputed. Prior to 1951 a partnership consisting of Jacqueline O'Shea, Dan M. O'Shea, R. E. L. Finley, Jerline Dick Finley and Robert W. Finley bought in the individual names of the partners a tract of land located in Oklahoma City, Oklahoma. This tract of land was leased to Louis Priddy and Pauline Priddy who sold an option to buy the lease to one of the owners, Robert W. Finley. A club was formed called the Branding Iron Club.2 The stockholders of the Club fluctuated during the period involved but were basically Jacqueline O'Shea, R. E. L. Finley, Jerline Dick Finley and Robert W. Finley. The club purchased the option to buy the lease and exercised it. However, a new ten year lease between the individual owners and the club was entered into on September 29, 1951. Subsequently, the individual owners of the tract formed a corporation, Highland Beach, Inc., to which they transferred the land. During 1953 it was decided that it was desirable to have a swimming pool for the use of members of the club. To carry out this plan the taxpayer was organized. Its basic stockholders were Jacqueline O'Shea and Dan M. O'Shea, but Robert W. Finley was an officer thereof at one time. On June 1, 1953 the club leased to the taxpayer a fraction over three acres of its tract of land upon which the swimming pool here involved was built. As of March 31, 1956 the overall cost of the pool was almost $54,000. There was conflicting evidence in the court below as to the stated period of time covered by the lease to the taxpayer but the court found that it was for a stated period of time of one hundred months, thus terminating at the same time as the lease from Highland Beach to the club.
The relationship of the other stockholders to Jacqueline O'Shea was as follows: Dan M. O'Shea, husband; R. E. L. Finley, father; Jerline Dick Finley, mother; Robert W. Finley, brother.
In April or May of 1957 an investigation by an Internal Revenue Agent disclosed that for some months the $150 per month rental had not been paid by the taxpayer for fiscal year 1955 and none had been paid for fiscal year 1956.
The taxpayer paid tax on its income for the fiscal years ending March 31, 1954 and 1955. Thereafter, on January 10, 1957 the taxpayer filed claims for refund for the fiscal years ending March 31, 1954 and 1955 on the ground that it had a net operating loss for the fiscal year ending March 31, 1956 in the amount of $3,930.99, and was therefore entitled to the benefit of the carry back provisions of Title 26 U.S.C.A. § 172. The claims for refund were not allowed. The taxpayer then filed this suit to recover the refunds claimed to be due.
On October 25, 1957, the United States filed a petition in intervention in this action and asked to recover $852.48 plus interest as a result of an unpaid deficiency assessment for the period June 1, 1953 to March 31, 1954, and for an additional $1,158.30 plus interest for the period April 1, 1954 to March 31, 1955. The refund refusal and alleged deficiencies were the result of the taxpayer's depreciating the swimming pool over the stated period covered by the lease rather than the useful life of the pool.
The case was tried to the court who concluded that the taxpayer should have no refund and that the United States
The sole issue in this case is whether for tax purposes the swimming pool here involved is to be amortized...
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