- 39 -
having been one of the originators of the fast-food concept in
the United States) and other rental properties.
The tax returns provide the following:
1984 1985 1986 1987 1988 1989
Gross Receipts $184,528 $410,000 $927,000 $1,684,469$1,253,850$1,210,350
Cost of Goods Sold
(cost-houses & lots) 116,899283,171 691,058 1,507,664 1,070,108 1,082,998
Gross Profits 67,629 126,829 235,942 176,805 183,742 127,352
Gross Rents 613,758 688,147 733,308 841,314 1,413,983 1,834,533
Net Capital Gain58,536 694,880 16,774 18,545 20,351 -0-
Ordinary Gain 6,308 -0- -0- -0- -0- -0-
Petitioner points out that the financial records divide its
operations into rental activities and construction activities.
It argues that its profits from construction activities range
from 6.5 percent to 24.3 percent, indicating a trend of decreased
profits from construction activities and of increased profits
from rental activities over the period. In making this argument,
petitioner compared gross profits from construction activities to
gross rents. Presented with only petitioner's financial returns,
we cannot accept its conclusion that construction of property
held for sale was a minor portion of its activities, when
petitioner had gross receipts of $1,253,850 in 1988 and
$1,210,350 in 1989, compared to gross rents of $1,413,983 in 1988
and $1,834,533 in 1989.
17(...continued)
management and the raising of capital.
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