deductions under section 212 dependent on activity entered into primarily for production of income or managing income producing property
How later courts described this case
- deductions under section 212 dependent on activity entered into primarily for production of income or managing income producing property
Written by the judges who cited it.
The opinion
COLLINS, Judge
(dissenting):
I cannot agree with the court’s conclusion in this case, and reluctantly I must dissent. At the outset, it should be stated that I regard this as a very difficult and a very close case. Very simply stated, my disagreement with the majority is that I feel that plaintiffs have sustained their burden of proof in showing that they acquired and held works of art primarily for investment rather than for personal enjoyment.
The majority have cited a number of facts and circumstances which they claim support their position that plaintiffs were engaged in the collection of art primarily for personal pleasure, As I view these same facts and circumstances, they could just as easily support a position favoring investment intent. Consequently, I feel that the factors relied upon by the court could be applied with equal weight to either side. If these facts were the only points to consider, I would have to agree with the majority since I would conclude that this would not be sufficient to satisfy plaintiffs’ burden of proof.
However, there are a few other factors mentioned by the court which point directly to an investment intent. These include plaintiffs’ desire to find an investment which would act as a hedge against inflation, plaintiffs’ meticulous bookkeeping system, and the fact that they spent so little time at their homes where the large majority of their works of art were kept. (They spend 30 days a year in their New York apartment where 77.8 percent of their art objects are located.) These factors are the ones which, to me, tip the scales in favor of an investment intent.
I am further influenced by the fact that Commissioner Hogenson, who conducted the trial and heard the testimony of all the witnesses, found that plaintiffs had met their burden of proof and were engaged in the collection of art primarily for investment purposes. I feel that, in a case which is as close and as difficult as this one, some weight *1324 should definitely be attached to this advantage of the commissioner to observe demeanor and judge credibility.
I conclude, therefore, that the weight of the evidence presented is in favor of showing that plaintiffs were engaged in the collection and maintenance of art objects primarily for investment reasons rather than for their own personal pleasure and enjoyment. I would adopt the commissioner’s findings of fact (which has been substantially done by the court) and his recommended opinion. 1
. I would not adopt that portion of Commissioner Hogenson’s recommended opinion allowing only two-thirds of the expenses relating to items actually used by plaintiffs. I feel that the percentage should be higher (possibly 80 to 85 percent) .