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construction was financed by petitioner through the bank he was
accustomed to dealing with. Petitioner through his guaranty and
reacquisition obligation was at all times at risk with respect to
the Lawrence Drive property. WLC had no risk or exposure with
respect to the additional outlay of funds required to finance
construction of the building. WLC had no potential for or
exposure to any economic gain or loss on its acquisition and
disposition of title to the Lawrence Drive property.
The reality of the subject transactions as we see them is a
taxable sale of the McDonald Street property to WLC.
Petitioner’s purchase in 1992 of the Lawrence Drive property, on
which he intended to build a new facility for his business as the
replacement for his McDonald Street property, put him in the
position of arranging to improve the Lawrence Drive property, as
well as to sell the McDonald Street property. Petitioner’s prior
quitclaim transfer to WLC of title to the unimproved Lawrence
Drive property, which petitioners try to persuade us was
petitioner’s taxable sale, amounted to nothing more than a
parking transaction by petitioner with WLC, which contractually
bound itself to acquire from petitioner the McDonald Street
property that petitioner was going to relinquish permanently, as
well as to reconvey to petitioner the Lawrence Drive property as
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