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property under section 1031.1 More specifically, we must decide
whether petitioner held the exchanged real property primarily for
sale so that the gain is taxable in the 1989 taxable year.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein. Petitioner's principal office was located
in San Bernardino, California, at the time it filed its petition.
Petitioner filed a U.S. Corporation Income Tax Return, Form 1120,
for the taxable year 1989, with the Director, Internal Revenue
Service Center, Fresno, California. Petitioner used a fiscal
year ending March 31.
Petitioner was incorporated on September 18, 1957, under the
laws of the State of California. From petitioner's inception to
the taxable year 1991, Neal T. Baker (Mr. Baker), as president
and director of petitioner,2 controlled and directed its
operations. Additionally, starting in 1987, Mr. Baker was
petitioner's chief financial officer. During the period from
1 All section references are to the Internal Revenue Code
in effect for the year at issue, unless otherwise indicated. All
Rule references are to the Tax Court Rules of Practice and
Procedure.
2 At times during the period 1978 to 1991, Neal T. Baker
also served as treasurer and secretary of petitioner.
Besides his role with petitioner, Mr. Baker was a charter
member of the Business Bank of California. As a chairman of the
bank's loan committee, Mr. Baker reviewed construction loans.
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