Neal T. Baker Enterprises, Inc. - Page 35

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          fifty-fifty chance of survival.  In November 1988, Mr. Baker                
          underwent surgery, which was followed by chemotherapy.  Mr. Baker           
          testified that as a result of contracting cancer, he made a                 
          decision that petitioner would discontinue subdividing land;                
          thereafter, petitioner built some homes on existing lots but no             
          longer subdivided raw land into lots.                                       
               As petitioner's main decision maker, Mr. Baker's health                
          impacts petitioner, but we are examining petitioner's intentions            
          in regard to the Exchange Property in 1989 and not necessarily              
          petitioner's decisions regarding other aspects of its trade or              
          business.                                                                   
               We first consider Mr. Baker's statement that he spent only             
          20 percent of his time at the time of exchange working for                  
          petitioner, while he spent the other 80 percent of his time                 
          supervising the food operations of Baker's Burgers, Inc.  Mr.               
          Baker and Terry Talley managed petitioner's construction                    
          activities.  Because petitioner subcontracted all of its                    
          construction work, the actual number of permanent employees                 
          employed by petitioner or Mr. Baker's diminished time with                  
          petitioner is of little significance.                                       
               Petitioner presented no evidence of actions of its Board of            
          Directors to corroborate Mr. Baker's statement that petitioner no           
          longer was subdividing land.  Instead, we note that on Form 1120,           
          for the taxable years 1988, 1989, 1990, and 1991, petitioner                





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