Neal T. Baker Enterprises, Inc. - Page 41

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          petitioner constructed the 50 locations over a period from prior            
          to its incorporation in 1957 to the date of the trial.  Besides             
          Mr. Baker's statement of constructing fast-food locations,                  
          petitioner did not present any evidence regarding subdivision               
          activities on property on which fast-food stores were later                 
          constructed.                                                                
               On the other hand, we note that petitioner was engaged in              
          developing other properties (in addition to the Beaumont                    
          Property) from 1978 to 1991.  Petitioner purchased 75 unimproved            
          lots in Pacific Street in Highland, California.  Petitioner built           
          25 houses, installed improvements on the remaining 50 lots, and             
          sold all the lots in 1980.  Petitioner also had development                 
          projects in San Bernardino, Yucaipa (20 lots, which were                    
          purchased in 1986 for the purpose of building houses thereon and            
          to sell the houses upon completion), and La Quinata (20 lots,               
          which were purchased in 1988).                                              
               We agree with petitioner that it was engaged in several                
          activities, which included acquiring and holding real estate for            
          fast-food locations (which were later leased to Baker's                     
          Burgers).19   At the same time, we find that petitioner also was            


               19  Petitioner states that:                                            
               Its activities included the following (i) holding raw land             
               for investment purposes, (ii) holding fee title to fast-food           
               locations for rental to Baker's Burgers, (iii) acting as               
               master lessor to Baker's Burgers with respect to fast-food             
                                                             (continued...)           




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