- 40 -
Furthermore, for each taxable year 1982 through 1991, on
Form 1120, petitioner listed "real estate subdivider and
developer" as its principal business activity.18 While "real
estate operator and lessor of buildings" is an option provided in
the Instructions to Form 1120, during 1981 to 1991, petitioner
never listed "real estate operator and lessor of buildings" as
its principal business activity.
In taxable year 1987, on Form 3115, petitioner stated that
its business and principal income was "real estate subdivider and
developer, real estate rentals," and affirmatively answered that
it produced or acquired property for resale to which section 263A
applied.
Mr. Baker testified that petitioner was in the business of
subdividing and developing prior to 1990. However, petitioner
asserts that this is true only to the extent that the subdivision
and development activities related to the eventual construction
of fast-food stores or, in some circumstances, single-family
residences. Mr. Baker stated that of the 80 fast-food locations
owned by petitioner, it built approximately 50 of them. While
his testimony is unclear and undocumented, it seems that
18 Even though petitioner listed the wrong code number for
real estate subdivider and developer from 1982 through 1991,
petitioner specifically stated its business as real estate
subdivider and developer.
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