In 1971, Bobby Isaac and his K&K crew took their #71 Dodge Charger Daytona and set a couple dozen land speed records at Bonneville. A few years later, that very car was sold for a mere $25,000. Perhaps even more interesting, the story of how it went from a pile of parts sitting outdoors to a museum-quality restoration is preserved for posterity in an obscure IRS tax court ruling.
The “K&K” of the racing team was K&K Insurance, a company owned by Nord and Teddy Krauskopf. The Krauskopfs made a name for themselves insuring racetracks around the country and then by fielding a very successful Grand National NASCAR team. With Bobby Isaac at the wheel in 1970, K&K won the national championship. And one of the cars he drove that year was the winged Charger Daytona. In 1971, NASCAR came out with new rules which basically did away with the wings but the K&K guys weren’t content to just park their car. The Daytona had already set the closed course record for a NASCAR-legal car at 201.104 MPH. They decided to take it to Bonneville and see what it would do on the Salt Flats. There, they set a couple of dozen records including one that is still awe-inspiring: The car covered a flying mile at an average speed of 216.945 MPH.
After the record runs, the car returned home and was taken on a publicity tour. It did not race again, however. Eventually, the car appears to have been dismantled and simply left in a pile. Winged car fans know that the car resides currently in the Wellborn Musclecar Museum in Alexander City, Alabama, and it has been faithfully restored. But how did it get from the pile of parts to the museum?
Greg Kwiatkowski is a winged car enthusiast (he is currently restoring the Chrysler “Engineering” Daytona – the first car to run a 200+ MPH lap on a NASCAR track) and he recently reminded me of the court case Nord Krauskopf had with the IRS. I ran across it years ago but had forgotten the trove of details it contained.
Krauskopf sold his insurance business and as he was dividing up some of the assets with the new owner, they decided Krauskopf could keep “Number 71” as the court called it. At that point – five years after Bonneville – the car was in rough shape and the parties agreed it was only worth $25,000. Krauskopf then paid Robert Gee $10,000 to restore the car. Significantly, Gee had been a K&K crewmember and had particular expertise on this car as he had worked on it when it was raced. He discounted his fee because of his love of the car and friendship with Krauskopf.
After it was restored, Krauskopf donated the car to the nonprofit International Motorsports Hall of Fame Museum at Talladega and took a deduction on his taxes of $165,000. The IRS squawked and said the deduction was too large. After the parties fought over this issue (and one other arcane tax issue that I can’t even pretend to understand or care about) a tax court judge was forced to make a ruling. Exactly how much was the “Number 71” worth at the moment Krauskopf donated it? The IRS had said it was a simple issue: Just add the agreed on value of $25,000 for the pile of parts and then Gee’s $10,000 fee. They were willing to concede a value of $35,000 for the fully restored car as it was donated.
Krauskopf argued that the car had more value than that. And the judge agreed. The Fair Market Value of something is not simply the sum of the cost of the parts and their assembly. The court wrote: A car with the history of Number 71 would obviously be worth a great deal more when completely restored to its former racing condition, than the value of a pile of partially disassembled parts covered with rust and imbedded with salt the discounted cost of reassembling.
The court granted Krauskopf a deduction of $100,000 for his donation to the museum. Those are 1984 dollars so I’ll leave that to the economists in the audience to figure out what that would be worth today. Beyond that theoretical argument, I’m just happy someone thought to save those salty and rusty parts before they decayed completely.
Steve Lehto is a writer and from Michigan. He specializes in Lemon Law and frequently writes about cars and the law. His most recent books include Preston Tucker and His Battle to Build the Car of Tomorrow, and Dodge Daytona and Plymouth Superbird: Design, Development, Production and Competition. He also has a where he talks about these things.