- 32 -
and selling commercial property, including the Gulf Highlands
resort.
Petitioners argue that the 40 acres was acquired as a
passive investment and that the development activities of Towers
Development should not be attributed to them. The record is
clear, however, that from the outset, Briggs, Mr. Morris, and
Daniell had a preconceived plan to develop both the phase I land
acquired by Towers Development and the adjacent 40 acres, and to
split net profits therefrom equally as part of their joint
venture. Briggs testified that the acquisition by Towers
Development of the 100 acres making up phase I and the
acquisition by Briggs and Daniell of the adjacent 40 acres were
structured as separate transactions for tax reasons.23 About 13
23 On direct examination, Briggs testified as follows:
Q. When you bought this property, did you consult your
accountants about the transaction?
A. They recommended that we structured [sic] it that way.
They said-–and I’m paraphrasing this and I may not be
exactly right. It was a long time ago. They said, Well, if
you buy it over here–-one piece over here-–you’ve got one
entity–-and this other one here is a different entity, when
you get-–if this different entity causes some action that
causes the value of the land to go up, you know, and you
buy–-the other entity goes and buys it for the real value of
the land, as it went up, but the second one didn’t work,
well, then you’d be stuck with the land.
But anyway, that would be qualified for what they said
was long-term capital gain, and you’d pay less taxes.
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011