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Land Sales And Purchase
12 Months Ended
Dec. 31, 2015
Land Sales And Purchase [Abstract]  
Land Sales And Purchase

14.LAND SALES AND PURCHASE

 

On October 6, 2015, the Company sold 6 acres of land adjacent to the Racetrack for $1,459,000 and recorded a gain of $660,000 on the Consolidated Statements of Operations – Gain on sale of land.  Under the purchase agreement, the Company has the option to repurchase up to one acre within 3 years from closing date at the sale price of approximately $240,000 per acre. According to ASC 360-20-40-38 - Derecognition, the Company recorded the repurchase option acre as a deferred gain liability in the amount of $240,000 on the Consolidated Balance Sheets. Since the risks and rewards were not completely transferred to the buyer based on the repurchase option, the Company maintains the asset on our financials in the amount of $110,000.  The Company believes any additional expenses associated with the option under the profit-sharing method will be immaterial because land is a non-depreciable asset.

 

This transaction was structured as a “deferred exchange using a qualified intermediary” pursuant to Internal Revenue Code (IRC) Section 1031 exchange (“1031 Exchange”) for income tax purposes.  The proceeds of the land sale were issued directly to the qualified intermediary and the Company recorded a receivable. As a result of utilizing the 1031 Exchange, the gain on sale of land of $789,000 was deferred for income tax purposes.

 

On December 14, 2015, the Company entered into a lease agreement to purchase approximately 32 acres of land adjacent to the Racetrack with a total purchase price of $4,881,000. The Company paid $1,459,000 in cash that included land proceeds of $1,443,000 that was paid directly from the qualified intermediary. As of December 31, 2015, the proceeds receivable balance due from the qualified intermediary totaled $16,000. The lease obligation of $3,178,000 is payable monthly, beginning January 15, 2016, in the amount of $58,533, including a 4% annual interest rate, through December 15, 2020. This transaction was also structured as a “deferred exchange using a qualified intermediary” pursuant to IRC 1031 exchange for income tax purposes.

 

On December 23, 2015, the Company entered into purchase agreement to sell approximately 24 acres of land adjacent to the Racetrack property. Under this agreement the buyer agreed to purchase the land for $4,300,000. This agreement is structured to utilize the IRC 1031 Exchange and the Company intends to utilize the proceeds to pay the remaining balance of the lease agreement. The Company anticipates closing within the next six months