- 38 -
estate." Municipal Bond Corp. v. Commissioner, 382 F.2d 184, 188
(8th Cir. 1967), revg. in part and affg. in part 46 T.C. 219
(1966) (dealing with section 1221). The fact that land was held
for many years does not, by itself, establish an intention to
hold the property for investment rather than sale. See Stockton
Harbor Indus. Co. v. Commissioner, 216 F.2d 638, 655-656 (9th
Cir. 1954).
In claiming that it held the Beaumont Property and the
Exchange Property for investment purpose, petitioner asserts that
its subdividing and developing activities were very limited.16
Petitioner points out that it sold all of its houses through
unrelated realtors and that it did not engage in any construction
activities, instead it used subcontractors. Petitioner contends
that the heart and soul of petitioner related to the location,
development, and construction of fast food sites to be held for
investment. Petitioner states that a majority of its income is
derived from the rental of fast-food locations17 (Mr. Baker
16 Petitioner also asserts that it had a history of holding
properties for investment, including properties that it at one
time intended to develop. However, the record does not support
petitioner's position.
17 At times, petitioner blurs the distinction between
petitioner and the separate corporation Baker Burger's Inc. When
petitioner spun off in 1969 the fast-food operations to Baker
Burger's Inc., Mr. Baker 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
(continued...)
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