Albachten v. Commissioner
This text of 1971 T.C. Memo. 229 (Albachten v. Commissioner) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
Memorandum Findings of Fact and Opinion
SACKS, Commissioner: Respondent determined deficiencies in petitioners' Federal income tax for the years 1966 and 1967 in the respective amounts of $250 and $31.25. The sole issue for decision is whether the purchase by petitioners of shares of the capital stock of the Palo Alto Hills Golf and Country Club, a California Corporation, in 1958, was a transaction*104 entered into for profit, so that the loss sustained by them upon the subsequent disposition of such stock in 1966 was a deductible loss under
Findings of Fact
Hubert T. Albachten and Rosella A. Albachten are husband and wife who resided at 1260 Cotton Street, Menlo Park, California at the time of filing of their petition herein. They filed joint Federal income tax returns for the calendar years 1966 and 1967 with the district director of internal revenue at San Francisco, California.
Sometime in 1968 a corporation known as the Palo Alto Hills Golf and Country Club (hereinafter referred to as the Club) was organized under the laws of the state of California. Its purposes were to provide a recreational and social facility through the construction, ownership and maintenance of an 18 hole golf course, a golf pro shop, a swimming pool, a bar and a dining room which would also provide food services in and about the pool area. The Club was to be located at 2700 Page Mill Road in Palo Alto, California and its facilities, subject to certain exceptions, were to be for the use of its members only. Memberships*105 in the Club were classified as "social" and "golfing."
In or about October of 1958 petitioners herein were approached by the management of the Club and solicited to buy stock - i. e., a membership - therein. Petitioners responded to this solicitation by purchasing a "golfing" membership represented by capital stock of the Club for which they paid $1,500. At the time, it was pointed out to them that this purchase price compared favorably with the membership cost of a neighboring country club - Los Altos Golf and Country Club - whose memberships were selling for between $2,200 and $3,000.
In October of 1958 the Club owned nothing but unimproved land. As the next two years passed this land was gradually converted into a golf course, club house and pool with appurtenant dining and golf pro facilities. This was not done, however, without some additional cost to the membership and in October of 1959 petitioners were assessed and paid an additional capital contribution of $100. Likewise in August of 1960 and in February of 1962 petitioners were assessed and paid the additional sums of $925 and $500 respectively, thus giving 985 them a cost basis of $3,025 for their capital stock-membership*106 in the Club.
It was not until February of 1960 that the Club's golf course was completed, and in that month monthly dues of $38.40 began to be collected from the members as had previously been agreed upon. Later that year a clubhouse and other facilities were also completed.
Prior to purchasing their membership in the Club, petitioner Hubert Albachten had not played golf since 1941 and petitioner Rosella Albachten had never played golf. After the completion of the golf course and clubhouse late in 1960 petitioner Hubert Albachten began to play golf at the Club on the order of two or three times a month and petitioner Rosella Albachten on the average of once a month. The children of petitioners also began to use the facilities, namely, the swimming pool and for the purchase of clothes at the pro shop.
In September of 1961 the Club's dues were increased to $44 per month and remained at that figure until May of 1963 when they were increased to $60.50 per month. Also in early 1964 the Club began to assess its members a mandatory $60 per calendar quarter minimum charge for food and beverages. During the entire period of petitioners' membership in the Club they spent very little over*107 and above the actual cost of dues and the mandatory quarterly minimum charge assessed by the Club. They paid dues during the years 1960 through 1965 as follows:
| Year | Amount |
| 1960 | $ 422.40 |
| 1961 | 483.20 |
| 1962 | 528.00 |
| 1963 | 746.00 |
| 1964 | 721.00 |
| 1965 | 726.00 |
| Total | $3,626.60 |
The charges to them for food and beverages for the years 1962 through 1965 were as follows:
| 1962 | $ 65.68 | (total of separate charges over 9 or 10 months) |
| 1963 | 46.59 | (total of separate charges over 10 months) |
| 1964 | * 241.05 | Free access — add to your briefcase to read the full text and ask questions with AI RelatedNew Colonial Ice Co. v. Helvering 292 U.S. 435 (Supreme Court, 1934) James E. Austin and Elizabeth G. Austin v. Commissioner of Internal Revenue 298 F.2d 583 (Second Circuit, 1962) Evans v. Rothensies 114 F.2d 958 (Third Circuit, 1940) Austin v. Commissioner 35 T.C. 221 (U.S. Tax Court, 1960) Cohen v. Commissioner 44 B.T.A. 709 (Board of Tax Appeals, 1941)
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