1988 Tax Ct. Memo LEXIS 28 | Tax Ct. | 1988
MEMORANDUM OPINION
TANNENWALD,
Year | Deficiency |
1981 | 15,162.00 |
1982 | 794.00 |
After concessions by the parties, the sole issue for decision is whether, in 1981, petitioner's yacht qualified for the investment tax credit.
The facts have been fully stipulated. The stipulation of facts and attached exhibits are incorporated herein by this reference.
Petitioner resided in Litchfield, Connecticut, at the time that he filed his petition herein. He filed his 1981 and 1982 Federal income tax returns using the cash receipts and disbursements method with the Andover1988 Tax Ct. Memo LEXIS 28">*30 Service Center, Andover, Massachusetts.
On June 3, 1981, petitioner purchased a sailing yacht named
On June 16, 1981, an application for the measurement of the vessel by the United States Coast Guard (Form CGD7-2632) was filed on behalf of petitioner by Yacht Documentations, Inc. On July 1, 198, the Coast Guard issued a Certificate of Admeasurement (Form CG-1414) describing the shape and setting forth the measurements of the vessel.
On August 21, 1981, petitioner filed with the United States Coast Guard an Application of Owner for and Notice of Award of Official Number and Signal Letters (Form CG-1320). On the same day, he also filed: (1) a Designation of Home Port of Vessel (Form CG-1319), on which he designated Bridgeport, Connecticut, as the home port of
On February 9, 1982, the Coast Guard advised Yacht Documentation, Inc., that an official number had been awarded to
Section 38 1 allows an investment tax credit for investments in section 38 property. Section 38 property is defined in section 48(a) and generally includes all depreciable tangible personal property. Section 48(a)(2)(A) provides, however, that "Except as provided in subparagraph (B), the term 'section 38 property' does not include property which is used predominantly outside the United States." Among the exceptions is "any vessel documented under the laws of the United States which is operated in the foreign or domestic commerce of the United States * * *." Section 48(a)(2)(B)(iii). Respondent's regulations provide: "A vessel is documented under the laws of the United States if it is registered, enrolled, or licensed under the laws of the United States by the Commandant, United States Coast Guard."
At the outset, we note that, if
The sole issue is whether, during 1981,
Ship documentation during the years at issue was governed by provisions of Title 46 of the United States Code. See
1988 Tax Ct. Memo LEXIS 28">*35 The Coast Guard regulations in effect in 1981 contained the procedural requirements that governed petitioner's application for vessel documentation. 7 First, an official number was required, which was obtained by filing an application using Form CG-1320. Documentation of Vessels,
1988 Tax Ct. Memo LEXIS 28">*36 As our findings of fact show, long before the end of 1981, a complete application for an official number was pending --
We recognize that
To reflect concessions by the parties,
Footnotes
1. Unless otherwise noted, all section references are to the Internal Revenue Code as amended and in effect in the years at issue. ↩
2. Enrollment and licensing are reserved for vessels engaged in coastwise or fishing activities. See
46 C.F.R. sec. 67.07-13 (1981) ;46 C.F.R. secs. 67.17-5↩ through -9 (1986).3. These sections were repealed by the Vessel Documentation Act, Pub. L. No. 96-594, sec. 127, 94 Stat. 3453, 3459 (1980), whose effective date was June 1, 1982. Vessel Documentation Act, sec. 128, 94 Stat. at 3461. The Vessel Documentation Act was repealed by Act of Aug. 26, 1983, Pub. L. No. 98-89, sec. 4(b), 97 Stat. 500, 605 (1983), which replaced Vessel Documentation Act with substantially similar provisions. See
46 U.S.C.A. secs. 12 ,101-12 ,122 (West Supp. 1987)↩ .4. Under the Vessel Documentation Act, a vessel displacing at least five tons and owned by an individual who is a citizen of the United States was eligible for documentation.
46 U.S.C. sec. 65b (1982) . See also46 U.S.C.A. sec. 12 ,102 (West Supp. 1987)↩ .5. This function has been transferred to the Commandant, U.S. Coast Guard. See
46 C.F.R. sec. 66.01-3↩ (1981) .6. This provision is, in substance, substantially the same under current law. See
46 U.S.C. sec. 65e(a) (1982) ("Upon application by the owner of any vessel eligible for documentation, the Secretary shall issue a certificate of documentation of a type specified in * * * this title.");46 U.S.C.A. sec. 12 ,103 (West Supp. 1987)↩ .7. These regulations were replaced in 1982 by new regulations. See Coast Guard Dec. 80-107,
47 Fed. Reg. 27,494↩ (1982) .8. Evidence of proper marking was Form CG-1322 filled out by a Coast Guard officer or employee. However, "If the vessel is at a place not readily accessible to an officer or employee of the Coast Guard, the owner or his agent shall certify as to the proper marking * * *."
46 C.F.R. sec. 67.15-3 (1981) .We note that both the requirement of the official number and the requirement of marking such number were in addition to the requirements prescribed by statute. Both the numbering system and requirements of vessel marking were authorized by statute.
46 U.S.C. sec. 45 (1976)↩ .9. The ministerial nature of the remaining functions to be performed by the Coast Guard is confirmed by the limited purpose of registry, namely "to declare the nationality of a vessel engaged in trade with foreign nations, and to enable her to assert that nationality wherever found." See
, 199↩ (1912).Anderson v. Pacific Coast Steamship Co., 225 U.S. 187">225 U.S. 18710. We are constrained to note that respondent has sought a "heads, I win, tails, you lose" result in this case. He has contended that lack of documentation deprives petitioner of the investment tax credit for 1981 and that the credit would not be available in 1982 because
Dona Sol↩ was not placed in service in that year.