- 4 - formerly carried on by Neal T. Baker Enterprises. He further stated that the two businesses were for all practical purposes totally unrelated, and that it had become necessary to conduct the two businesses separately in order to facilitate flexibility, expansion, cost control, proper management and the raising of capital. Mr. Baker testified that the restructuring was in part to prepare Baker's Burgers, Inc., for a possible public offering. Petitioner transferred assets (valued at $36,000) to Baker's Burgers, Inc., in exchange for stock of Baker's Burgers, Inc. As a result of the restructuring, petitioner held real estate holdings, which included buildings for fast-food locations (which were leased to Baker's Burger, Inc.), real estate held for investment, and real estate held for development. After 1969, petitioner continued to construct additional fast-food locations, and also continued to contract with third parties for the construction of residential properties. In regard to its construction operations, petitioner had a contractor's license with the State of California, but it did not have any contracting equipment. All the contracting work was done through subcontractors. Petitioner recorded the work done (payments) by its subcontractors under work-in- progress/construction in-progress accounts. Petitioner used realtors to sell its properties. Petitioner recognized revenue from these sales when escrow closed. On February 1, 1983, petitioner filed its restated articles of incorporation with the State of California, providing thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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