Universal Drilling Co., Inc. v. United States

ALVIN B. RUBIN, District Judge:

This income tax refund suit involves two separate matters. The first relates to whether a transaction involving an offshore drilling barge should have been treated as a sale or a lease; the second involves allocation of the purchase price paid for land and buildings for depreciation purposes. Of necessity, the issues are discussed separately.

I. THE DRILLING BARGE TRANSACTION

A

Universal owned a drilling barge known as the “MR. LOUIE.” It had attempted unsuccessfully either to sell or to lease the barge. It had substantial funds invested in an unproductive asset.…