Weirick v. Comm'r of Internal Revenue
| Decision Date | 27 June 1974 |
| Docket Number | 1539-73.,5192-72,Docket Nos. 5191-72 |
| Citation | 62 T.C. 446 |
| Parties | JOSEPH B. WEIRICK, ET AL.,1 PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Roy E. Crawford and Hart H. Spiegel, for the petitioners.
Nicholas G. Stucky, for the respondent.
Held, the cable-support and holddown towers located between the terminal towers of a chair-type ski lift are ‘tangible personal property’ within the meaning of sec. 48(a)(1)(A), I.R.C. 1954, for which the investment credit provided by sec. 38, I.R.C. 1954, is allowable. Held, further, the wooden passenger ramps in question are also ‘tangible personal property’ within the meaning of sec. 48(a)(1)(A); but the earthen ramps are ‘inherently permanent structures' as that phrase is used in sec. 1.48-1(c), Income Tax Regs., and the investment credit is not allowable for them.
Respondent determined the following deficiencies in petitioners' Federal income tax:
+----------------------------------------------------------------------------+
¦Petitioner(s) ¦Taxable year ¦Deficiency ¦
+------------------------------------------------+--------------+------------¦
¦ ¦ ¦ ¦
+------------------------------------------------+--------------+------------¦
¦Joseph B. Weirick ¦( 1963 ¦$1,612.00 ¦
+------------------------------------------------+--------------+------------¦
¦ ¦( 1964 ¦4,537.40 ¦
+------------------------------------------------+--------------+------------¦
¦ ¦ ¦ ¦
+------------------------------------------------+--------------+------------¦
¦ ¦( 1964 ¦2,484.00 ¦
+------------------------------------------------+--------------+------------¦
¦Joseph R. Weirick and Dorothy V. Weirick ¦( 1966 ¦6,541.35 ¦
+------------------------------------------------+--------------+------------¦
¦ ¦( 1967 ¦92.00 ¦
+------------------------------------------------+--------------+------------¦
¦ ¦( 1968 ¦11,456.00 ¦
+------------------------------------------------+--------------+------------¦
¦ ¦ ¦ ¦
+------------------------------------------------+--------------+------------¦
¦ ¦( 1964 ¦400.51 ¦
+------------------------------------------------+--------------+------------¦
¦ ¦( 1965 ¦362.39 ¦
+------------------------------------------------+--------------+------------¦
¦Hugh W. Killebrew, Jr., and Eleanor F. Killebrew¦( 1966 ¦622.41 ¦
+------------------------------------------------+--------------+------------¦
¦ ¦( 1967 ¦386.77 ¦
+------------------------------------------------+--------------+------------¦
¦ ¦( 1968 ¦1,087.35 ¦
+----------------------------------------------------------------------------+
The sole issue presented for decision is whether amounts spent for the construction and installation of ski lift cable-support and holddown towers and passenger ramps qualify for the investment credit provided by section 38.2
Petitioners in docket Nos. 5191-72 and 5192-72 were legal residents of California at the time they filed their petitions with this Court; petitioners in docket No. 1539-73 were legal residents of Nevada at the time their petition was filed.
Throughout the period in controversy, Joseph B., Joseph R., and Dorothy V. Weirick were shareholders in Weirick & Co. (hereinafter referred to as the company), an electing small business corporation which operated a ski resort known as China Peak in the Sierra Nevada Mountains. The company kept its books on the accrual basis using a fiscal year ending November 30.
Hugh W. Killebrew, Jr., during all relevant years, was a partner in a general partnership known as Heavenly Valley (hereinafter sometimes referred to as the partnership), which was engaged in the business of owning and operating a ski resort at South Lake Tahoe, Calif. He was also a partner in another partnership which held as its principal asset a partnership interest in Heavenly Valley. Both partnerships kept their books on the cash basis and used a calendar taxable year.
During the fiscal year ended November 30, 1966, and the calendar years 1964 through 1968, respectively, the company and the partnership expended substantial sums to construct and install ski lifts, all of which were of chairlift design. Each chairlift has an upper and a lower terminal; cable-support or holddown towers (line towers or towers) located between the terminals; a haul cable; sheave assemblies on the terminals and sheave assemblies on the line towers to support or hold down the haul cable; chairs; and a device for gripping the chairs to the haul cable. The equipment at the terminals includes a main drive motor, an optional auxiliary engine, gear reducer, receiver, shafts, couplings, electric controls, brakes, and counterweight assembly. Loading and unloading ramps are usually found at both the upper and lower terminals. The sheave assemblies on the line towers usually consist of four to eight rubber-tired pulleys on which the cable moves.
Ski lifts are planned by registered professional engineers. The design and configuration of a lift depends chiefly upon the terrain over which the lift is to be installed and upon other variables. These other variables include the overall vertical rise and horizontal length of the lift; average snow depth in the area, its effect on the lift's clearance requirements, and the pressure it will place upon the lift; maximum speed of the lift; maximum capacity, frequency of carriers (chairs), and carrier spacing; and the wind velocity and potential ice loading on the cable and chairs. These and other factors determine the horsepower requirement of the main drive motor, the counterweight size, and the specifications of the haul and counterweight cables.
Each ski lift has both drive equipment and a device for maintaining proper tension on the haul cable. The drive equipment is usually located at one of the terminals, and the tension device is located at the other. Each terminal tower which holds either the drive equipment or tension device is normally sunk in a concrete foundation containing from 50 to 100 cubic yards of concrete.
The ‘drive terminal’ normally consists of a steel structure which supports and holds in place the drive bullwheel, brake assemblies, drive and auxiliary motors, gear assemblies, and drive shaft which is attached to the drive bullwheel.
The equipment at the ‘tension terminal’ includes a bullwheel which moves back and forth so as to provide proper tension on the haul cable. Proper tension is necessary to prevent the cable from slipping on the drive bullwheel and to allow the braking system to function correctly. Usually, the bullwheel is attached to a carriage which moves back and forth on tracks located on the terminal structure. A counterweight is attached to the carriage by means of pulleys. When added tension is brought to bear on the bullwheel, it and the carriage move along the tracks toward the lift, and the counterweight is pulled up. As the pressure on the bullwheel is reduced, the counterweight descends, and the bullwheel and carriage return to their original position.
The line towers are located between the two terminals. These towers may be cable-support towers, cable holddown towers, or a combination of both. They are made from tubular steel pipe that is between 18 and 24 inches in diameter, and one-quarter to one-half inch in thickness. The towers have steel crossarms on which sheave assemblies are installed. The profile of the towers, i.e., their nature and location, depends primarily upon the terrain and the potential maximum snow depth over which the ski lift is constructed.
A line tower is either bolted to a reinforced concrete foundation or sunk into the foundation. Where the tower is sunk into the foundation, a metal sleeve slightly larger than the tower is, in some instances, imbedded into the cement when it is poured, and the tower is later inserted into the sleeve and welded to it. The size of the foundation (containing from 6 to 20 cubic yards of concrete) varies from 5 feet by 8 feet to 11.5 feet by 12.5 feet, depending on the height of the tower, the lateral support provided by the surrounding soil, and other variables such as load and wind factors. The height of the towers varies from 24 to 54 feet above the ground. The bolted line towers are as permanent as the welded towers, and the welded towers are as easy to remove and reinstall as the bolted towers.
The footing design and the method of erecting the towers are essentially identical to the footing design and method of erecting the terminals. The principal difference is that the terminals are subject to more stress and, consequently, they are constructed with more steel and have a substantially larger concrete foundation.
After the tower profile has been determined, the installation of the sheave assemblies on the line towers is planned. The number of sheaves used on each tower and their configuration, as well as the number of towers at a particular site, depends upon whether the tower is a holddown or a cable-support tower and the stress caused on each tower by the cable. The sheaves, each of which has a limited load capacity, are attached to the tower's steel crossarms, and for all practical...
To continue reading
Request your trial
-
Illinois Cereal Mills, Inc. v. C.I.R.
...Internal Revenue, 65 T.C. 664 (1975) (outdoor advertising signs are Sec. 38 property to extent removable); Weirick v. Commissioner of Internal Revenue, 62 T.C. 446, 455-56 (1974) (earthen ski ramps are permanent and thus not Sec. 38 property, while wooden ski ramps are removable and qualify......
-
Munford, Inc. v. Comm'r of Internal Revenue
...penultimate sentence of sec. 1.48-1(c), Income Tax Regs.; they are not tangible personal property under sec. 48(a)(1)(A). Weirick v. Commissioner, 62 T.C. 446 (1974), distinguished. Herschel M. Bloom, Ralph B. Levy, and Peter J. Genz, for the petitioners.Lourdes M. Desantis and Donald W. Wi......
-
Texas Instruments Incorporated v. Commissioner
...permanent, property that is in the nature of machinery may qualify as tangible personal property. See Weirick v. Commissioner [Dec. 32,668], 62 T.C. 446, 452-453 (1974). Section 38 property also includes "other tangible property". Sec. 48(a)(1)(B). Other tangible property must also be somet......
-
Scott Paper Co. v. Comm'r of Internal Revenue
...mandated by the facts herein, are as follows: (1) “What is the manner of affixation of the property to the land? Joseph B. Weirick, (62 T.C. 446 (1974)); C. C. Everhart, (61 T.C. 328 (1973)); Beverly R. Roberts, (60 T.C. 861 (1973)).” Whiteco Industries, Inc. v. Commissioner, supra at 673. ......
-
Comments on proposed interest capitalization regulations: December 12, 1991.
...Rep. No. 99-313, 99th Cong., 2d Sess. 144 (1986); H.R. Rep. No. 99-426, 99th Cong., 1st Sess. 627 (1985). (6) See Weirick v. Commissioner, 62 T.C. 446 (1979) (dealing with ski-lift tower cable supports), and Marineland of the Pacific, Inc. v. Commissioner, 34 T.C.M. (CCH) 1250 (1975) (suppo......