
    362 F. 2d 266
    TODD TIBBALS AND HELEN A. TIBBALS v. THE UNITED STATES
    [No. 346-60.
    Decided June 10, 1966]
    
      
      Daniel A. Taylor, attorney of record, for plaintiff. K. Martin "Worthy, Hamel, Morgan, Parh <& Saunders and Taylor & Kelly, of counsel.
    
      Bichard J. Boyle, with whom was Assistant Attorney General Mitchell Bogovin, for defendant. O. Moxley Feather-ston, Lyle M. Turner and Philip B. Miller, of counsel.
    Before CoweN, Chief Judge, Whitaker, Senior Judge, Laramore, Durfee and Davis, Judges.
    
   Per Curiam :

This income tax refund case, involving the years 1951-1954, was referred to Trial Commissioner Lloyd Fletcher with directions to make appropriate factual findings and to submit his recommendation for a conclusion of law. At this stage there remain two entirely separate issues in the case, and the commissioner’s report contains an opinion, finding, and recommended conclusion on each aspect. His recommendation is for the plaintiffs on both issues. The parties accept the commissioner’s opinion, findings, and conclusion on the second issue, involving the sale by the principal taxpayer of stock in a wholly-owned corporation (Park-lawn Manor, Inc.). Exceptions have been taken by the defendant, briefs filed, and oral argument had on the first issue, involving gain from the sale of real estate. On that issue we differ to some extent from Commissioner Fletcher; our views are set forth, in Part I, infra. On the second issue, as to which no exception has been filed, we agree with the trial commissioner and adopt the portion of his opinion dealing with that question; it appears in Part II, infra. On the whole case, we decide that plaintiffs are entitled to recover in accordance with this opinion, and enter judgment to that effect. The amount of recovery will be determined under Rule 47(c).

I

Tax-payer’s Sales of Beal Estate

This part of the case raises the recurring question whether certain parcels of real estate, prior to their sale, were “held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business.” Int. Rev. Code of 1939, § 117(a) (1) (A). A guiding rule in this class of tax litigation is that each case must be decided on its own facts and circumstances. Miller v. United States, 168 Ct. Cl. 498, 504, 339 F. 2d 661, 663-64 (1964) ; Browne v. United States, 174 Ct. Cl. 523, 356 F. 2d 546 (1966). A detailed recitation of the facts is therefore necessary.

Plaintiff is an architect in Columbus, Ohio. He began the practice of his profession in 1935 as a sole proprietor but later formed a partnership with other architects under the firm name of Tibbals, Crumley, and Musson. The firm has always engaged in a general architectural business and has designed and supervised the construction of numerous public buildings, residences, and private commercial buildings in the Columbus area.

During 1946 and 1947, in addition to the practice of his profession, plaintiff engaged in the construction of 54 houses on his own account. These houses were built on various unimproved lots which plaintiff had acquired in prior years. In 1946 he individually sold 50 such houses, and in 1947 he sold the remaining four. At no time thereafter has plaintiff, solely in his individual capacity, engaged in the construction of houses for sale to customers. Instead, he formed three corporations, Columbus Southern Development Company in 1946, Martha Washington Builders, Inc. in 1949, and Arlington Ridge Development Company in 1951, all the stock of which plaintiff has owned during the times material herein. These three closely-held corporations engaged extensively in the construction of houses on unimproved land transferred to them either by plaintiff or others, and they held such real estate primarily for sale to customers in the ordinary course of their trade or business. Also, during the period 1942 through 1953, plaintiff either owned or controlled numerous other corporations which engaged in various related activities, such as the ownership and management of rental properties (including FHA housing projects), the manufacture and sale of lumber, and the manufacture and sale of panels for prefabricated houses.

In early 1950 plaintiff entered into the transaction which was to precipitate the dispute herein. He and his brother, Charles E. Tibbals, Jr., jointly purchased a tract of land previously subdivided into lots in an area on the outskirts of Columbus known as the River Ridge Subdivision. More than six months later, the brothers disposed of these lots by three separate sales at different times and to different purchasers under circumstances related below. In their respective tax returns, each brother treated his very substantial gain from these sales as capital gain. The Commissioner of Internal Revenue disagreed and held the gain to be ordinary income.

In the ensuing litigation, Charles has been successful. The Tax Court of the United States decided that Charles did not hold his one-half interest in the lots primarily for sale to customers in the ordinary course of his trade or business and had properly reported his share of the realized gain as long-term capital gain. Charles E. Tibbals v. Commissioner, 17 T.C.M. 228 (1958). Because plaintiff’s activities with respect to the lots were more extensive than, and in part different from, those of his brother, this court is now called upon to decide whether the two stand in different tax positions.

The Biver Bidge Subdivision was originally acquired and subdivided into about 1,200 lots sometime during the 1920’s by the Arlington Bidge Bealty Company. Plaintiff has never held any stock in that corporation, but he was acquainted with some of its officers and had a general familiarity with the area in which the subdivision was located. During the years of its ownership, Arlington Bidge Bealty Company had sold about two-thirds of the 1,200 lots to individual purchasers, and in the late 1940’s the county had installed a sewer system in the subdivision. Very little other development took place, however, and the tract continued to look like a “big briar patch.” In early 1950, due apparently to stockholder dissension, the officers of Arlington Bidge Bealty Company decided to sell the company’s remaining lots as a block and then liquidate the corporation. The company’s real estate salesman approached plaintiff, who was a neighbor and friend, told him that the remaining lots were available as a block for $20,000, and urged him to buy them. Despite their ragged appearance and lack of improvements, plaintiff concluded that the asking price was cheap because of the location of the lots immediately north of one of the most desirable residential areas in Columbus. Accordingly, on February 21, 1950, he signed an agreement to purchase the lots, subject, however, to the approval of his brother whose financial participation he apparently needed. He contacted Charles in Tennessee, and it was agreed between them that they would j oin in the purchase. The transaction was closed on April 27,1950.

A few days thereafter, plaintiff was approached by an acquaintance who had recently gone into the real estate business and who had been circulating a petition among various lot owners for tbe construction by tbe county of water mains in River Ridge. Tbis man asked plaintiff as tbe joint owner of tbe largest single block of lots to sponsor tbe petition and to belp defray some minor expenses. Plaintiff agreed to do so and authorized bis attorney, George H. Chamblin, to enter into tbe matter. Cbamblin thereupon prepared new petitions for water, sewer, and street improvements and presented them to the county officials. In his testimony, plaintiff tried to make light of bis activities in these efforts to get county improvements, but tbe record is clear that, acting mostly through his attorney, be was tbe moving force behind them. He knew that tbe proposed improvements would substantially enhance tbe value of bis and Ms brother’s holdings in River Ridge. The Board of County Commissioners acted favorably on tbe petitions. In the fall of 1951 tbe county commenced construction of tbe improvements and completed tbe work in early 1958.

When plaintiff and his brother purchased the River Ridge lots, it was orally agreed between them that, since Charles lived in Tennessee, the legal title to the property would be held for convenience in plaintiff’s name. In April 1951, two of the lots were sold to Cozy Cottages, Inc., one of plaintiff’s wholly-owned corporations, for the purpose of building two experimental prefabricated homes thereon.

There were no further sales until June 1952. In September of the previous year plaintiff had organized a wholly-owned corporation under the name of Arlington Ridge Development Company for the purpose of building houses on lots in River Ridge. To that end, in June 1952 (the contract of sale was entered into on September 21,1951), plaintiff and Charles sold 100 lots for about $80,000 to the Development Company which proceeded, under plaintiff’s general supervision, to build houses on about 60 of the lots. The county improvements were only partially completed, and the houses did not sell very well. Of the remaining lots, about 15 were sold by the Development Company to the Columbus Home Builders Association for a Parade of Homes; 20 lots were sold by it to a man named AlesMre who was one of the builders in tbe Parade of Homes: and ten were sold to Kay Investments, Inc., the stock of which was owned by plaintiff. Although the Development Company was the seller in the above sales contracts, in many instances the deeds to the purchaser, for convenience and to save conveyancing expense, ran directly from plaintiff to the purchaser, rather than to Arlington Ridge Development Company and then to the purchaser.

The remaining 333% lots were sold in October 1952 to Lewis Leader and his nominee corporation for a gross sales price of $266,800, which amounts to an average price of $800 per lot. In Charles’ case the Tax Court found that the Leader sale and the two preceding sales were effected without activity on the part of the joint owners; that neither plaintiff nor his brother were licensed real estate brokers; that the property was not listed with real estate agents, nor advertised for sale, and no “for sale” signs were erected thereon. The Tax Court further found that at the time of the sale to Leader of the 333% lots, individual lots in the area were selling at prices ranging from $1,000 to $1,500-The record here, as well as in the Tax Court, amply supports those findings. Prior to the sale of the 333% lots to Leader, plaintiff had been solicited by a number of people, including real estate brokers, to sell individual lots, but he and his brother refused to do so. In the fall of 1952, one McGreevy, an employee of the Guaranty Title and Trust Company of Columbus, introduced Leader to plaintiff. Prior thereto McGreevy had been assisting Leader in the obtaining of mortgage loans, and Leader had informed McGreevy that he would like to buy some land in Columbus on which to build houses. He asked McGreevy’s help in finding some available land with sewer and water improvements. McGreevy knew of plaintiff’s lots in River Ridge, and he assumed that they might be for sale. He introduced Leader to plaintiff, and negotiations followed between the two. Plaintiff consulted his brother with regard to an offer from Leader to purchase the 333% lots, and while Charles would have preferred to have held the lots longer for further appreciation in value, be deferred to plaintiff’s judgment that a bulk sale should be made to Leader. In October 1952, plaintiff and Leader reached an agreement of sale which was closed the following month.

On these facts the trial commissioner — treating together all three sales by plaintiff (and his brother) — determined that the Liver Ridge property was not held by Todd Tibbals primarily for sale to customers in the ordinary course of his trade or business. Our discussion starts from the fundamental premise that “primarily” means “of first importance” or “principally”. Malat v. Riddell, 383 U.S. 569 (1966). We also consider the three sales individually since “the taxpayer’s'purpose of holding property may vary with respect to different tracts. Upon the capital gain issue, purpose or intention must be determined with respect to each tract and such purpose may vary with respect to the different tracts.” Municipal Bond Corp. v. Commissioner, 341 F. 2d 683, 689-90 (C.A. 8, 1965). Also,. “[i]t will not be questioned that a property owner may hold some of it for sale to customers in the ordinary course of business and hold the remainder as capital assets.” Wood v. Commissioner, 276 F. 2d 586, 590-91 (C.A. 5, 1960). See, for further examples, Margolis v. Commissioner, 337 F. 2d 1001, 1005 (C.A. 9, 1964) ; Burgher v. Campbell, 244 F. 2d 863, 864 (C.A. 5, 1957) ; Lobello v. Dunlap, 210 F. 2d 465, 469 (C.A. 5, 1954).

With regard to the sale of the two lots (in April 1951) to Cozy Cottages, Inc. and the sale of one hundred lots (in June 1952) to the Arlington Ridge Development Company, we disagree with the trial commissioner and rule that that property was held by Todd Tibbals primarily for sale to customers in the ordinary course of his trade or business. Several factors lead us to the conclusion that, from the acquisition of the land up to these sales, this part of the River Ridge real estate was acquired and held for resale in a real estate venture. Plaintiff was no stranger to real estate development. He had previously built houses on his own account (in 1946 and 1947); from that time on, he had formed closely held corporations which engaged extensively in development and in the real estate business, and he had often transferred unimproved land (at his cost) to these controlled companies. He was sufficiently connected with real estate that he had once been president of the Columbus Home Builders Association. Immediately upon acquisition of River Ridge land in 1950, plaintiff became the “moving force” in a project to 'have the county put in water, sewer, and street improvements. This work began in the fall of 1951 and was completed in the early part of 1953. The sale to Cozy Cottages, Inc., one of plaintiff’s wholly-owned corporations — in April 1951, even before the improvement work began — was for the purpose of building two experimental prefabricated houses (obviously to see whether they would evoke consumer interest). The Arlington Ridge Development Company, likewise wholly-owned by plaintiff, was created in September 1951 for the specific purpose of building houses on 100 lots in the River Ridge subdivision. When the lots were sold by plaintiff to it, the Development Company proceeded, under plaintiff’s general supervision, to build houses on about 60 lots, for sale to home-owners.

In all of these respects, the sales to Cozy Cottages, Inc. and to the Development Company are remarkably close to the sale by stockholders to their controlled corporation, the profits from which we recently held in Browne v. United States, supra, 174 Ct. Cl. at 525, 356 F. 2d at 547, to be taxable as ordinary income. The plaintiff’s background is similar to that of the taxpayers in Browne and his dealings with the property were quite comparable. As in that case, “here, we have substantial personal developmental activities, plus use of and sale to a controlled corporation which continued the development, plus some comparable purchases by taxpayer [s] of other real estate for development.” 174 Ct. Cl. at 526, 356 F. 2d at 547. These elements add up to an acquisition, holding and sale primarily in the ordinary course of a real estate business carried on by plaintiff in his individual capacity, with the aid of his controlled corporations. See, also, Engasser v. Commissioner, 28 T.C. 1173 (1957).

To reach this conclusion we do not disregard corporate entities or say that the business of plaintiff’s wholly-owned companies was automatically his business. It is established that, in determining the trade or business of an individual taxpayer, the business activities of his closely-held corporation will not be attributed to him (see, e.g., Whipple v. Commissioner, 373 U.S. 193 (1963)), but it is also true that a taxpayer may be individually in the same business as his corporation, may make that business his own, or may utilize the company in his own business. It is therefore appropriate, in circumstances such as these, to see whether the taxpayer uses his controlled company — for instance, as agent, co-participant, or joint venturer — to implement or further his own personal business, as he easily can. That type of inquiry has often been made by the courts, including this one, in cases testing (under § 117(a) of the 1939 Code or § 1221 of the 1954 Code) whether profit from a sale of property was ordinary income or capital gain. See Boeing v. United States, supra, 144 Ct. Cl. at 84-87, 168 F. Supp. at 767-69 ; Browne v. United States, supra ; Burgher v. Campbell, supra, 244 F. 2d at 864-65 ; Lakin v. Commissioner, 249 F. 2d 781 (C.A. 4, 1957) ; Kaltreider v. Commissioner, 255 F. 2d 833, 836, 837, 838-39 (C.A. 3, 1958) ; Bauschard v. Commissioner, 279 F. 2d 115, 118 (C.A. 6, 1960) (individual joint venturer); Heebner v. Commissioner, 280 F. 2d 228 (C.A. 3, 1960), cert. denied, 364 U.S. 921; Patterson v. Belcher, 302 F. 2d 289, 294, 297 (C.A. 5, 1962), cert. denied, 371 U.S. 921; H-H Ranch, Inc. v. Commissioner, 357 F. 2d 885 (C.A. 7, 1966) ; Engasser v. Commissioner, supra, 28 T.C. 1173. That is what we do in this case, and why we consider it proper to take account of the nature and activities of the controlled companies, Cozy Cottages, Inc. and the Arlington Nidge Development Company, in deciding that plaintiff’s sales to them brought him ordinary income rather than capital gain.

With respect to the sale to Lewis Leader, in October 1952, we have a different view. When plaintiff purchased the River Ridge land early in 1950, he may have intended to develop and sell all or most of it. But we judge that by the time of the organization of the Arlington Ridge Development Company in September 1951, plaintiff had probably narrowed bis development objectives to tbe 100 or 102 lots with which his Development Company and Cozy Cottages, Inc. were to be concerned (and which we have just discussed) - At any rate, it seems to us that by October 1952, when the last sale (the Leader transaction) occurred, plaintiff no longer held the remaining 333% lots primarily for sale to customers in the ordinary course of a real estate business. Apparently, the 50 to 60 houses being built on the land transferred to the Development Company had not been selling well, and we infer that plaintiff, if he had originally intended to develop or retail all of his 436 lots in Eiver Eidge, had given up that intention and had contented himself with the 102 lots previously sold to his controlled corporations. If he had wished to sell the 333% lots individually, he could have made a considerably greater profit than he obtained from the disposition in bulk to Leader. However, neither plaintiff nor his companies made any effort to develop or retail this land. Leader was, of course, wholly independent of plaintiff, and plaintiff had no interest in Leader’s use or development of the property.

A taxpayer’s purpose can change during the course of his holding of property, and in such cases it is the dominant purpose of his holding during the period prior to the sale which is critical. See Palos Verdes Corp. v. United States, 201 F. 2d 256, 258-59 (C.A. 9, 1952) ; Goldberg v. Commissioner, 223 F. 2d 709, 712 (C.A. 5, 1955) ; Miller v. United States, supra, 168 Ct. Cl. at 506, 339 F. 2d at 664-65 (concurring opinion). We find that, by the time of, and for some time prior to, the sale to Leader in October 1952, plaintiff held the remaining 333% lots as an investment, and that his financial interest was in “the realization of appreciation in value accrued over a substantial period of time” (Commissioner v. Gillette Motor Transport, Inc., 364 U.S. 130, 134 (1960)), rather than in the profits “arising from the everyday operation of a business” (Corn Products Co. v. Commissioner, 350 U.S. 46, 52 (1955)). This is borne out by tlie circumstances we have mentioned, as well as by the fact that plaintiff’s brother Charles would have preferred to hold these lots longer for further appreciation in value. Plaintiff has therefore overpaid his tax with respect to the gain on this sale.

II

Sale of Pcvrhlcw.on Stools

Commissioner Fletcher’s opinion on the second question, to which neither party excepts and which the court adopts, is as follows:

The other remaining issue in this case involves the proper tax treatment to be accorded plaintiff’s realization of gain on the sale of his stock in Parklawn Manor, Inc. (Parklawn). The resolution of this question requires consideration of a complicated statutory enactment whereby, in 1950, Congress cast a shadow over “the rainbow leading to the capital gain pot of gold” by turning its attention to an ordinary-income-to-capital-gain conversion device known to the tax bar by the picturesque name of the “collapsible corporation.”

Through an intensive development of this sophisticated device, Hollywood had proved that its expertise in the art of make-believe was by no means confined to the entertainment industry. An outstanding actor, producer, and director would form a corporation to produce a single motion picture with a view toward liquidating the corporation as soon as the picture could be realistically appraised but before realization of any appreciable profits at the corporate level. Upon completion of the picture and after negotiation of a contract for distribution, the corporation would be liquidated, or “collapsed,” its assets being transferred in kind to its stockholders as joint owners. The collapsed corporation paid no tax, of course, on the distribution in liquidation, and the stockholders reported the difference between the cost of their stock and the fair market value of their interest in the corporate assets as long-term capital gain. The fair market value of tbe picture was then amortized over the estimated life of the film, and, accordingly, only the excess of the distribution receipts over such amortized basis was taxed at ordinary income rates. Hence, nearly all the profits which the actor, producer, and director had earned by their services in the production and distribution of the picture were taxed as capital gain. See Pat O'Brien v. Commissioner, 25 T.C. 376 (1955). The same pattern was employed in the building construction industry. See Freeman, Collapsible Corporations, 11 N.Y.U. Inst. 407, 408 (1953) ; Mertens, Law of Federal Income Taxation, Vol. 3B, Sec. 22.55.

Congress attempted to foreclose this practice by the addition of section 117 (m) to the 1939 Code. That section provides, with certain limitations not applicable here, that the gain from sale or exchange of stock of a collapsible corporation shall be considered a gain from the sale or exchange of property which is not a capital asset, and hence taxable at ordinary income rates. Insofar as pertinent to this case, the section goes on to define a collapsible corporation as:

* * * a corporation formed or availed of principally for the * * * construction, * * * of property, * * * with a view to —
(i) the sale or exchange of stock by its shareholders * * * prior to the realization by the corporation * * * constructing * * * the property of a substantial part of the net income to be derived from such property, and
(ii) the realization by such shareholders of gain attributable to such property.

The pertinent parts of the Regulations promulgated under this section are contained in Reg. 118, Section 39.117-(m) (1) (b) and are set forth in the footnote below.

It is at once apparent that both, the statute and the interpretative regulations speak, at least partially, in subjective terms. “Thus the process of psychoanalysis has spread to unaccustomed fields”. By conveying’ its message in terms of the taxpayer’s subjective motive, the statute leads one irresistibly to the conclusion that the problem to be solved must be essentially a question of fact. See Bev. Bul. 56-50, 1956-1 C.B. 174, 175. Did plaintiff form, or avail himself of, Parklawn “with a view to” selling his Parklawn stock before Parklawn had realized a substantial part of the net income to be derived from its housing project ?

In determining whether plaintiff had the proscribed “view,” it is necessary to inquire into the history of his dealings with, and ultimate sale of, his stock in Parklawn, the corporation alleged by defendant to be collapsible. Park-lawn was formed by plaintiff in October 1950 for the purpose of engaging in the business of constructing, owning, and operating rental residential property. He acquired all of its common stock for $1,000, and the Federal Housing Administration (FHA) acquired all of the preferred stock for $100. Plaintiff was the president of the corporation, and his attorney, George H. Chamblin, was its secretary.

Shortly after its incorporation, Parklawn acquired from another one of plaintiff’s corporations nearly 41 acres of vacant land in Columbus for the purpose of constructing thereon what was known as an FHA 608 housing project. With financing guaranteed by FHA, Parklawn constructed the project under the name of Parklawn Manor. It consisted of 384 family units contained in 156 buildings. The construction of all the housing units was completed, and they were occupied in their entirety, before the end of 1951.

Meanwhile, on April 5, 1951, C. E. Tibbals, Sr., plaintiff’s father, had formed a corporation under the name of Lincoln Management Co. (Lincoln) to engage in the rental and management of rental real estate. Lincoln set up the original rental program for Parklawn Manor and procured all the original tenants under a management contract with Parklawn which expired in April 1952.

As president of Lincoln, Tibbals Sr. directed its activities in renting the Parklawn Manor units until the expiration of the management contract. He owned all of Lincoln’s outstanding stock until January 12, 1953. On that date he created an inter vivos trust in which he appointed George H. Chamblin as trustee, named plaintiff’s children as primary beneficiaries, and transferred to the trust all his shares of Lincoln stock.

Thereafter, in August of the same year, Chamblin suggested to plaintiff that he sell his stock in Parklawn to Lincoln. In making this suggestion, Chamblin appears to have been motivated by several considerations. For one thing, as secretary of Lincoln he was aware that it had excess assets available, 'and he believed that using those assets to acquire Parklawn would be beneficial to the Tibbals Sr. trust whose interests he was obliged, as trustee, to promote. Also, Tibbals Sr. had complained that neither Lincoln, nor he as its president, had enough to do, and as Chamblin saw it, the acquisition of Parklawn would remedy this situation.

Plaintiff’s initial reaction to Chamblin’s suggestion was one of surprise. Prior to this time he had given no thought to selling his Parklawn stock. However, upon considering the suggestion further and after discussing it with his father, he concluded that the idea was a good one and should be executed.

Consideration was then given to the matter of a selling price. Because of the family relationships involved, both plaintiff and Chamblin (who bore a fiduciary relation to plaintiff’s children under the Tibbals 'Sr. trust) felt that the price paid by Lincoln for the Parklawn stock should be a fair and reasonable one. The opinion of a leading real estate appraiser in the area was obtained as to the fair market value of Parklawn’s land and improvements. The appraiser’s estimated total value for land and buildings was fairly close to the total cost figure as shown on the corporation’s books, but his breakdown values as between land and buildings differed considerably from the book figures. In any event, plaintiff’s ultimate decision was that the book value of his common stock, i.e., $46,200, reflected its fair value. Chamblin agreed.

Consequently, on August 31, 1953, plaintiff sold his stock to Lincoln for $46,200. On his income tax return he reported his profit of $45,200 as long-term capital gain. The Commissioner of Internal Revenue, however, included the entire $46,200 in plaintiff’s ordinary income on the ground that it was either a dividend or gain from the sale of stock in a collapsible corporation, and assessed a deficiency which plaintiff duly paid. Following disallowance of his claim for refund, plaintiff filed suit in this court.

In its brief and requested conclusions of laws relating to this issue, defendant appears to have abandoned any contention that the $46,200 paid to plaintiff by Lincoln constituted a dividend to him. Hence, the only remaining issue between the parties is whether plaintiff had the requisite view to sell his stock in Parklawn prior to the realization by that corporation of a substantial part of the net income to be derived from its property so that his gain is taxable as ordinary income rather than as capital gain.

In my opinion, the facts in this case clearly show that plaintiff did not entertain the “view” proscribed by the statute, and, therefore, Parklawn cannot be deemed a collapsible corporation as defined in section 117 (m). Despite some early indications to the contrary by the Courts of Appeals for the Second and Fourth Circuits, it now appears to be settled that the view to sale contemplated by section 117 (m) must have existed before completion of the construction work for which the corporation was formed. Jacobson v. Commissioner, 281 F. 2d 703 (3d Cir., 1960) ; Coates v. United States, 6 A.F.T.R. 2d 5200 (D. Ore., 1960) ; Elliott v. United States, 205 F. Supp. 384 (D. Ore., 1962) ; Charles J. Riley, 35 T.C. 848 (1961) ; Maxwell Temkin, et al., 35 T.C. 906 (1961) ; and Southwest Properties, Inc., 38 T.C. 97 (1962). In its opinion in the Jacobson case, supra, the court stated the correct rule as follows:

On the face of the statute Congress is here indicating a state of mind which must attend and gives significance to certain action. That action, as specified in the statute, is not merely any formation or use of a corporation but rather the formation or use of a corporation to construct or produce property. The “view” with which a corporation is used for a particular purpose must necessarily be a view entertained at the time of such use. Thus, only by a distorting disregard of the phrase “for the * * * construction * * * of property” is it possible to reach the conclusion that the "view to * * * sale” contemplated by the statute can arise for the first time in connection with corporate activity after the work of construction is completed.
* * * * *
Thus, the regulation, adopting what is certainly not an arbitrary interpretation of the statute, treats a corporation as collapsible only if “the view to sale” shall have existed at the time of the construction in which the corporate entity was used, or if circumstances which subsequently induce sale were themselves within contemplation during the period of construction. We are guided by and shall apply the statute as thus reasonably interpreted in the regulations. 281 F. 2d 705-6.

There is no dispute in this case that “construction” of Parklawn was completed, and its housing units were fully occupied, not later than the end of the year 1951, or some twenty months prior to plaintiff’s sale of his Parklawn stock. He testified that he had never given any thought to selling the stock prior to Chamblin’s suggestion in August 1953, and nothing in the record justifies an inference to the contrary. Indeed, the evidence is compelling that plaintiff’s decision to sell the stock was attributable, in the words of the regulation, “solely to circumstances which arose after the * * * construction * * It was long after completion of the construction that plaintiff’s father began to complain of his and Lincoln’s inactivity. Similarly, it was not until January 1953 that the “grandfather trust” was created by Tibbals, Sr. for the benefit of plaintiff’s children. Yet these after-arising circumstances, according to Chamblin, were the very factors which gave rise to his recommendation that plaintiff sell his Parklawn stock to Lincoln. These constitute “compelling facts” which, under the regulation, are sufficient to negate any prior existence of a “view” to sell.

However, defendant insists that in any event the foregoing after-arising circumstances could and should have been reasonably anticipated by plaintiff during the construction period. If this be true, the regulation infers the existence of the proscribed view as contended for by defendant. The argument is that plaintiff could have taken care of his father’s restlessness by some other type of contractual arrangement, such as a renewal of the previous management contract, and that plaintiff’s true motive in selling his Park-lawn stock to Lincoln was to give the property to his children at a nominal bargain price.

The relevance of this argument on the question of foreseeability is not at all apparent. It does not explain why plaintiff, during the Parklawn construction period, should have either foreseen restlessness 'by his father arising out of subsequent events, or should have anticipated that more than a year after construction was completed his father would create a trust for plaintiff’s children, much less that the Lincoln stock would be an asset of the trust. There is simply nothing in the record to justify a conclusion that plaintiff should have reasonably anticipated these subsequent occurrences which gave rise to Ohamblin’s recommendation.

It may be, as defendant suggests, that plaintiff was partly motivated in this transaction by a desire to see his children obtain the beneficial interest in Parklawn at a “nominal bargain price.” If so, however, such estate tax motivation would seem logically to have arisen after the creation of the Tibbals, Sr. trust, and this is still another factor negating the existence of the “view” requisite to collapsible treatment. The taxpayer at whom section 117 (m) aims is typically the one striving to get as much in the way of capital gain proceeds for his stock as possible, not one bent on giving it away or even selling it at a bargain.

In short, the evidence in this record shows clearly that, at no time during the construction of Parklawn Manor, did plaintiff entertain a view to sell his stock prior to the realization by Parklawn of a substantial part of the net income to be derived from the property. Accordingly, Parklawn was not a collapsible corporation, and plaintiff is entitled to treat the proceeds derived from his sale of its stock as capital gain. It is, therefore, unnecessary to consider the arguments of the parties dealing with the subsidiary question of whether, prior to the sale of plaintiff’s stock, Parklawn had realized a substantial part of the net income to be derived from its property.

Whitaker, Senior Judge,

dissenting in part:

I cannot agree with that portion of the opinion of the court which denies plaintiff capital gains treatment on the gain realized from the sales to Cozy Cottages, Inc. and Arlington Ridge Development Co.

To attribute to plaintiff the activities of the Arlington Ridge Development Co. on the ground that it acted as plaintiff’s agent seems to me tantamount to a complete disregard of tlie separate entity of the corporation.

Plaintiff organized the corporation to construct houses on the vacant lots and to sell them to customers in the ordinary course of the corporation’s trade or business. He .apparently did not want to engage in this business in his individual capacity as he had done in 1946 and 1947. That he had a legal right to do this admits of no doubt.

Once the lots were transferred to the corporation, everything that was done toward constructing houses on the lots and selling them was a corporate activity. Whatever plaintiff may have done with regard to the lots after they had been transferred to the corporation was, and could only have been, ,as an officer of the corporation. He did not act, and could not have acted, in his individual capacity with regard to them. Since he had no control, in his individual capacity, over the construction of houses on the lots and the sale of the lots by the corporation, it could not be said to have acted as his agent, in the sense that the acts of the agent are the acts of the principal.

Trial Commissioner Fletcher’s opinion deals adequately, and I think correctly, with the question presented in part I of the majority opinion. I would adopt his opinion as the opinion of the court. The portion of his opinion not contained in the majority opinion follows:

“Are the activities by plaintiff sufficient to warrant the inference that, despite his assertions to the contrary, he actually intended to and did hold his one-half interest in the Eiver Eidge lots ‘primarily for sale to customers in the ordinary course of his trade or business’ ? Judge Whitaker has recently phrased the question more succinctly when he said, ‘The question is, was plaintiff in the real estate business.’ William J. Miller v. United States, 168 Ct. Cl. 498, 339 F. 2d 661 (1964). In answering that question, he noted that ‘other cases are not very helpful’ but went on to observe [168 Ct. Cl. at 504, 339 F. 2d at 663] that a few useful tests have been judicially developed, such as:
c* * * £j16 plirp0S6 for which the property was acquired, the motive for selling it, the taxpayer’s method of selling the land, his income from the sale of it compared with, his other income, the extent of the improvements made to facilitate the sale of it, the frequency and continuity of sales, and the time and effort expended by taxpayer in promoting the sales in relation to his other activities. * * *’ [Citing cases]
“When these tests are applied to plaintiff as cm mdivickml taxpayer, it is reasonably clear that he was not engaged in the real estate business and did not hold his interest in River Ridge for sale to customers in the ordinary course of his trade or business. Putting to one side for the moment any consideration of the activities being carried on by plaintiff’s closely-held corporations, the record supports plaintiff’s assertion that he and his brother acquired the property in question as an investment. They were motivated by the conviction that the land would rapidly increase in value due to its favorable location, a conviction which proved to be well-founded. Consistent with their claim of investor status was the method of selling the land. Neither plaintiff nor his brother spent any significant time or effort in promoting sales. Except for the small sale to Cozy Cottages for experimental purposes, the two main sales were in bulk and were accomplished without solicitation. This is not the type of retailing operation which one expects to find in the case of a real estate dealer. In fact, the record shows that had plaintiff and his brother desired to undertake the expense and trouble of a retailing operation by selling individual lots rather than in bulk, they would have realized approximately one-third more gain from such a method of selling. As the Tax Court observed in Charles’ case, the absence of motive to make a greater profit is an element indicating that the property was not held primarily for sale to customers in the ordinary course of a trade or business.
“During the four-year period over which plaintiff received his share of the sales proceeds, he was actively engaged in the practice of architecture and in managing his several corporations. His gain from the River Ridge sales only amounted to a little less than 30 percent of his total income from all sources.
“It is true, of course, that plaintiff was quite active in the successful effort to persuade the Franklin County officials that water, sewer, and road improvements should be installed in River Ridge. While such activity frequently taints the owner with the status of a dealer or developer, it is also consistent with the desire of an investor to enhance the market value of his property as a whole and to make his capital asset more readily salable. See Fahs v. Crawford, 161 F. 2d 315 (5th Cir. 1947) ; Boomhower v. United States, 74 F. Supp. 997 (D. Iowa 1947) ; and Ayling v. Commissioner, 32 T.C. 704 (1959). Unlike those cases where the taxpayer himself installed and paid for the improvements (see, for example, William J. Miller v. United States, supra), the River Ridge improvements were installed not by plaintiff but by the county and were paid for by special assessments against all lot owners. It is also significant to recall that the subdividing of River Ridge into lots was not done by plaintiff but by the prior owner.
“Thus, when viewed strictly in his individual capacity, plaintiff has carried the burden of showing that, like his brother, he did not hold the property in question primarily for sale to customers in the ordinary course of his trade or business. However, this does not end the inquiry. Defendant vigorously asserts that, in determining plaintiff’s status the court must look also to the activities of plaintiff’s closely-held corporations. The argument is that there then comes into view the true nature of plaintiff’s overall business, namely, a completely integrated construction and real estate business.
“There would be considerable merit to defendant’s contention were it permissible for the court either to disregard the corporate entities involved or to say that their businesses were plaintiff’s businesses. Through a combination of his individual talents as an architect with the building supply and construction capacities of several closely-held corporations, plaintiff can, and has, developed real estate projects from the design stage to the sale of the finished product. Several of his corporations are engaged solely in the construction and holding of houses for sale to their customers. In short, they are in the real estate business.
“To defendant, these facts lead inexorably to the conclusion that plaintiff is also individually engaged in the real estate business. Yet, no suggestion is made that these corporations are sham organizations with no business purpose. So far as the record shows, they have been treated as separate taxable entities, and no effort has been made to attribute their income, losses, deductions, etc. to plaintiff. It is only their business which defendant would attribute to plaintiff.
“However, it has long been settled that, in determining the trade or business of a taxpayer, the business activities of his closely-held corporation will not be attributed to the taxpayer. See for example, Whipple v. Commissioner, 373 U.S. 193 (1963) ; Burnet v. Clark, 287 U.S. 410 (1932) ; Watson v. Commissioner, 124 F. 2d 437 (2d. Cir. 1942) ; Jarvis v. Commissioner, 32 T.C. 173 (1959) ; Gordy v. Commissioner, 36 T.C. 855 (1961) Acq. 1964—2 C.B. 5 ; and Fink v. Commissioner, 23 C.C.H. Tax Ct. Mem. 475 (1964). In the Gordy case, supra, the Tax Court had occasion to consider the status of a taxpayer who, like plaintiff, was the controlling stockholder in a number of corporations engaged in the real estate business. In holding that the taxpayer’s sale of a tract of land to one of his residential development corporations resulted in capital gain, the Tax Court stated at 36 T.C. 859-860:
‘All that we have here are two isolated transactions. They are transfers of property by petitioner, the president of two corporations, to each of the two corporations both of which were engaged in the business of real estate development, including the sale of lots to individual purchasers and both of which were controlled (60 percent) by petitioner. We see nothing in this record which would warrant the conclusion that at the time of the transfer petitioner held this property primarily for sale to customers in the ordinary course of his trade or business.
‘Kespondent’s argument ignores the corporate entities of which petitioner was merely an executive officer. It attributes the corporation’s sales of lots to individual purchasers, to petitioner. Kespondent recognizes no distinction between a taxpayer holding property for sale to his customers and a taxpayer holding property for sale to his controlled corporation engaged in selling such property to its customers. Petitioner’s business was that of a corporate executive. There is no justification for imputing the real estate activities of the many corporations he owns, or controls, to him. Such transactions as are here involved might be vulnerable to a conflict-of-interest charge against the corporate executive but they furnish no grounds for holding the corporation’s business is the executive’s business.
‘The separateness of the corporate officer’s business and the business of the corporation he represents has long been recognized.’
“Accordingly, it is clear that the real estate business being carried on by plaintiff’s closely-held corporations is not to be considered as ‘his trade or business’ within the meaning of the statute. Even so, says defendant, it is an accepted principle that a taxpayer may, and frequently does, carry on a real estate business through agents whose activities are clearly attributable to the principal. From this premise, defendant argues:
t* * * 'ppjkajg formed a corporation whenever some specific project came along, and specifically formed the Arlington Ridge Development Company to build houses in River Ridge. In addition, when the lots were acquired, taxpayer owned two construction companies, two lumber companies, and a prefabricated housing manufacturing company. Taxpayer may not have spent much time with any one business, but he controlled those corporations, he made a practice of acquiring property in his own name which he later conveyed to his corporations, and he was the one benefiting from their activities. We submit that his corporations acted as his agents in the conduct of his affairs.’
“With one exception, all of the cases relied upon by defendant as supporting its contentions are distinguishable in that they involved either a closely-held corporation, trustee, or independent person acting as agent in the development and subsequent sale of land owned by the taxpayer. For example, in Kaltreider v. Commissioner, 255 F. 2d 833 (3rd Cir. 1958), it appears that the bulk of the real estate involved was never sold by the taxpayers to their closely-held corporation. It merely acted as an agent in constructing homes on its stockholders’ land, upon completion of which it advertised the completed homes and negotiated their sale. For the most part, the sales price was paid by the purchaser directly to the stockholders who executed the deeds of conveyance as grantors. In their original tax returns, the stockholders reported the profit on these sales in their individual tax returns rather than in the returns of their corporation. They were held to be engaged in the real estate business with the corporation merely acting as their agent to construct the houses and negotiate the sale thereof.
“The exception referred to is the case of Engasser v. Commissioner, 28 T.C. 1173 (1957). There the sale in question was by the taxpayer to a closely-held corporation which intended to construct houses thereon and sell them in the regular course of its business. In this respect the sale was similar to the sale by plaintiff and his brother of the 100 River Ridge lots to plaintiff’s closely-held corporation, Arlington Ridge Development Company. However, it was not that one sale which persuaded the Tax Court to place the taxpayer in the real estate business. To the contrary, the taxpayer’s long history of engaging in the general contracting and home construction business placed 'him individually in the business of buying and selling real estate. In fact, he had no other business. By contrast, plaintiff for the reasons stated above was not individually engaged in the real estate business.
“Accordingly, plaintiff’s share of the gain realized from the sale of the River Ridge lots should be taxed to him as long-term capital gain.”

FINDINGS OF FACT

The court, having considered the evidence, the report of Trial Commissioner Lloyd Fletcher, and the briefs and arguments of counsel, makes findings of fact as follows:

1. This case involves claims for refund of Federal income taxes, penalties, and interest for the plaintiffs’ fiscal years ended June 30, 1951, 1952,1953, and 1954, together with interest thereon, arising out of various adjustments made by the Commissioner of Internal Eevenue to the income reported by plaintiffs for those years. Only two of these adjustments remain at issue between the parties, all other disputed adjustments having been resolved by the parties through the execution and filing herein of an “Agreement of Partial Settlement” on April 8,1964. The effect of this partial settlement on the amount of any final judgment entered herein will be reflected in subsequent proceedings pursuant to Rule 47(c).

2. The plaintiffs now reside, and did reside during the years here involved, at Columbus, Ohio. They filed joint income tax returns during the period herein material on a fiscal year ended June 30- Joint returns for the fiscal years 1951, 1952, 1953, and 1954 were timely filed with the Collector of Internal Revenue, Director of Internal Revenue, and District Director of Internal Revenue, respectively, at Columbus, Ohio.

3. The plaintiff, Todd Tibbals, is an architect by profession, having obtained his degree in architecture from Ohio State University in 1932. In 1935 he began the practice of architecture as a sole proprietor, but later formed a partnership with George Crumley, Noverre Musson, and Joseph Ford under the firm name of Tibbals, Crumley and Musson. At all material times, the firm has engaged in a general architectural practice consisting of designing and supervising the construction of public buildings, residences, and commercial buildings, including schools and office buildings. Plaintiff is a former president of the Columbus Home Builders Association.

4. Since 1941 plaintiff has been represented by a Columbus attorney, George H. Chamblin, whose practice is devoted primarily to the fields of real estate and corporation law. In addition to representing plaintiff personally, Mr. Chamblin has handled all the legal work for various corporations in which plaintiff was the major stockholder and has acted as secretary for a number of those corporations. Prior to and during the years in question, plaintiff consulted Chamblin and sought his legal advice on every major business transaction in which plaintiff engaged.

5. Plaintiff’s brother, Charles E. Tibbals, Jr. (sometimes hereinafter referred to as Charles), has resided at all material times in Oneida, Tennessee. By profession Charles is a mining engineer, and he engaged in the practice of that profession until 1946 when he joined plaintiff in the organization of the Tibbals Flooring Company, the stock of which was acquired equally by plaintiff and Charles. The company leased a property in Oneida to engage in making prefabricated panels for houses. The property leased had been used in the manufacture of hardwood flooring and lumber products. The company gradually reconverted the property to its former business when the prefabricated panels business proved to be unsatisfactory.

Sale of Unimproved Beal Estate

6. In April 1950, plaintiff and Charles jointly purchased from the Arlington Nidge Realty Company, certain unimproved real estate, described as 357 lots, located near Columbus, Ohio, in what is and was at the time of the purchase known as the River Ridge Addition of the Arlington Ridge Realty Company’s River Ridge Subdivision in Franklin County, Ohio, hereinafter referred to as River Ridge. Plaintiff has never held any stock in the seller company. Then, in February 1951, pursuant to an option granted to plaintiff, he and Charles jointly purchased 79 additional lots in River Ridge for a total acquisition of 436 lots. Plaintiff and Charles each acquired a one-half undivided interest in said real estate and each paid one-half of the cost thereof. Because Charles did not live in the Columbus area, and for purposes of convenience, the title to said real estate was taken in the name of plaintiff only. Other than the one-half interest in said lots, Charles had never owned any real estate except his home and a small rental property. So far as plaintiff is concerned, prior to this time he had never purchased land solely as an investment, but in earlier years he had bought lots with the intention of building on them. Originally, the brothers held the River Ridge lots with only an oral understanding between them. However, in September 1951, on Mr. Chamblin’s recommendation, the agreement between them was reduced to writing in two contracts prepared by Mr. Chamblin and backdated to the respective dates of acquisition of the two parcels. The relevant part of the understanding between the brothers is reflected by those portions of the agreement relating to the 357 lots backdated to March 1,1950, and reading as follows:

4. That Todd may sell all or any part of said lots at not less than $700.00 per lot, if sold prior to three years from date hereof, and not less than $800.00 per lot, if sold at a time later than three years from date hereof; that said sale may be upon terms and conditions agreeable to Todd and that he may give an option or options for the purchase of all or part of said lots for a period or periods not to exceed one year from the date of the option.
5. That Todd may apply to the County and Municipal officials for the improvement of said real estate by the construction of sewers, streets, curbs, gutters and installation of water lines and other utilities provided the major cost thereof is assessed against the lots over a period of not less than ten years.
6. That in the event all or a part of said lots are sold, the proceeds from such sale, after payment of all expenses, shall be divided on an equal basis and that the half due 'Charles shall be paid to him after deducting any funds then due by Charles to Todd.

The supplemental agreement backdated to February 28, 1951, and dealing with the 79 additional lots purchased pursuant to option, was substantially similar to the March 1,1950 agreement but contained an added provision reading:

That Charles may request Todd at any time to convey to Charles an undivided one-half interest in and to the original group of lots purchased under the March 1, 1950 Agreement and the lots purchased by authority of this Agreement, excepting any lots previously sold by Todd.

7. Both, plaintiff and Charles testified at the trial in this case that they had acquired and held their respective one-half interests in the aforesaid 436 lots solely as an investment. Insofar as the one-half interest of Charles is concerned, the Tax Court of the United States held on March 19,1958, that Charles did not hold his interest in the lots primarily for sale to customers in the ordinary course of his trade or business, but as an investment. Charles E. Tibbals, et ux. v. Commissioner, T.C. Memo. 1958-44, Dkt. No. 63527, 17 T.C.M. 228. With respect to the transaction described above, the Tax Court stated as follows:

The record discloses that the real estate in question was platted sometime in the early twenties. At the time of its acquisition it was a “big briar patch, trees, brambles, and weeds all over the place-” No improvements were erected by the brothers, but some time subsequent to the purchase, the county installed roads, sewers, curbs, and water lines.
Only three sales were made. There was no listing, advertising, or efforts to sell. The record shows that at the time of the sale of the large block of 333% lots, single lots were selling at prices ranging from $1,000 to $1,500. Absence of motive to make a greater profit is an element indicating that the property was not held primarily for sale to customers in the ordinary course of a trade or business. See, Ross v. Commissioner, 227 F. 2d 265.
Considering all the facts and circumstances revealed by this record, we are persuaded that petitioner [Charles] has carried the burden of showing that the real estate lots in question were not held primarily for sale to customers in the ordinary course of his trade or business. In selling such real estate, petitioner was merely liquidating a capital asset held for more than six months. Petitioner properly reported his share of the realized gain as long-term capital gain taxable at the rate of 50 per cent.

8. Plaintiff’s activities with respect to the lots in question were more extensive than were those of his brother Charles. Although plaintiff took no significant action in connection with this property without first consulting Charles, the latter relied upon plaintiff’s judgment and greater familiarity with the Columbus area, and the record, both here and in the Tax Court, fully justifies the conclusion that, with respect to River Ridge, Charles was a passive investor.

9. Plaintiff’s more extensive activities with respect to the River Ridge property will now be summarized.

The prior owner of River Ridge was the Arlington Ridge Realty Company which, in the 1920’s, had subdivided the area into about 1,200 lots and then, over the ensuing years, had sold to various individual purchasers about two-thirds of the lots. Very little development of the area toolc place during this period, although in 1947-48 the county installed a sewer system in the subdivision. It continued, however, to look like a “big briar patch.” In early 1950, due apparently to stockholder dissension, the officers of Arlington Ridge Realty Company decided to sell the company’s remaining lots as a block and then liquidate the corporation. The company’s real estate salesman approached plaintiff, who was a neighbor and friend, told him that the remaining 857 lots were available as a block for $20,000, and urged him to buy them. Plaintiff was familiar with the subdivision, and despite its ragged appearance and lack of improvements, he concluded that the asking price was cheap because of the location of the lots immediately north of one of the most desirable residential areas in Columbus. Accordingly, on February 21, 1950, he signed an agreement to purchase the lots, subject, however, to the approval of his brother whose financial assistance he apparently needed. He contacted Charles in Tennessee, and it was agreed between them that they would j oin in the purchase. The transaction was closed on April 27,1950.

Sometime prior to May 1, 1950, one Clark Wideman had been circulating a petition among various lot owners for the construction by Franklin County of water mains in River Ridge. Wideman was a former newspaper reporter and public relations man who had recently gone into the real estate business. He was acquainted with plaintiff and in 1949 had done some public relations work for plaintiff’s architectural firm. Although he was not a lot owner in River Ridge, Wideman was interested in its development because he hoped to get real estate listings in the area and because he had a deal for the purchase of a tract adjoining River Ridge. On May 1, 1950, Wideman conferred with plaintiff and asked him to sponsor the petition being circulated on the ground that plaintiff and his brother owned the largest block of lots in the subdivision. Plaintiff agreed that the petition could be shown as “taken out” by him. He so advised his attorney, Chamblin, and sent Wideman to Chamblin’s office. Not being satisfied with the form of the petition which Wideman had been circulating, Chamblin prepared new petition forms. He transmitted these to the Franklin County Sanitary Engineer with a transmittal letter dated May 5,1950, reading as follows:

I enclose herewith onion skin carbon of first page of each of three Petitions being circulated by Todd Tibbals relative to the construction of water mains, sanitary sewers and streets in River Ridge Addition. Mr. Tib-bals said that you wanted a copy of each Petition. I am attaching to each copy a list of lots owned by Todd Tibbals in that Addition. I trust this will give you the information which you desire.

Chamblin testified that his use of the words “being circulated by Todd Tibbals” was due to a misunderstanding on his part. Actually, the petitions were not being circulated by plaintiff but by Wideman who eventually obtained the signatures of over 100 lot owners. It is clear from the record, however, that plaintiff was not only extremely interested in the success of the petitions; he was the moving force behind them. He was in contact with Wideman about once a week and paid some of the expenses incurred in contacting other lot owners. Also, he and Chamblin attended, along with other lot owners, a public hearing on the petitions before the Board of County Commissioners of Franklin County. The Board approved the petitions, whereupon two dissenting lot owners (and their wives) joined in an appeal from the Board’s order to the Probate Court of Franklin County. Plaintiff and one other interested lot owner were on motion permitted by the Probate Court to intervene in support of the Board’s actions, and Chamblin filed a legal memorandum in their behalf. On July 19, 1951, the Probate Judge entered an order dismissing the appeal after a settlement had been arranged whereby plaintiff paid the appellants a “few hundred dollars * * * to help them out on their assessments.” Commencing in the fall of 1951, the improvements consisting of water mains, additional sewers, and road improvements were started by the County. The work was completed by the early part of 1953.

10. From the foregoing it is clear that, despite his testimony to the contrary in the aforesaid Tax Court proceeding, plaintiff (acting mostly through his attorney) was an active proponent of the proposed water, sewer, and street improvements in River Ridge, He and his brother owned the largest number of lots therein. Each was convinced that the proposed improvements would substantially enhance the value of their holdings in River Ridge. That their belief was justified is borne out by the fact that within less than three years they were able to sell the properties for amounts exceeding ten times their purchase cost.

11. All of the aforesaid lots (except one-half of a lot not here material) were sold by plaintiff and Charles in three separate sales during the calendar years 1951 and 1952. The number of lots sold, the date of sale, gross sales price, the cost of the lots, and the gain realized from each of the respective sales, as found by the Commissioner of Internal Revenue in determining the additional taxes here in dispute, are as follows:

The two lots were sold to Cozy Cottages, Inc., an Ohio corporation, for the purpose of building two experimental prefabricated homes thereon. The 100 lots were sold to Arlington Ridge Development Company, an Ohio corporation, hereinafter referred to as “Development Co.” The 333% lots were sold to one Lewis Leader of New Orleans, Louisiana, acting on behalf of himself and/or Interstate Land, Inc., a Louisiana corporation, of New Orleans. Cozy Cottages, Inc., was organized in February 1917 and all of its stock was owned by plaintiff until its liquidation in July 1951. The Development Company was organized in September 1951, for the purpose of building houses on certain of the lots in River Ridge, and all of its stock was owned by plaintiff at all times material herein. Plaintiff at no time had any interest in Interstate Land, Inc. Title to certain of the lots sold to Development Company were held in the name of plaintiff until sold by the Development Company. The title was so held for convenience and in order to avoid two conveyances, one from plaintiff to the Development Company and one from the Development Company to the ultimate purchaser. All of the aforesaid lots were held by the plaintiff and Charles for a period of more than six months within the meaning of Section 117 (a) (4) of the Internal Revenue Code of 1939.

12. In the aforesaid litigation involving the interest of plaintiff’s brother in the River Ridge property, the Tax Court found that the above-mentioned three sales were effected without activity on the part of the joint owners; that neither plaintiff nor his brother were licensed real estate brokers; that the property was not listed with real estate agents, nor advertised for sale, and no “for sale” signs were erected thereon. The Tax Court further found that at the time of the sale to Leader of the 333% lots, individual lots in the area were selling at prices ranging from $1,000 to $1,500. The record here, as well as in the Tax Court, amply supports those findings. Prior to the sale of the 333% lots to Leader, plaintiff had been solicited by a number of people, including real estate brokers, to sell lots, but he and his brother refused to do so. In the fall of 1952, Charles J. McGreevy, an employee of the Guaranty Title and Trust Company of Columbus, introduced Leader to plaintiff. Prior thereto McGreevy had been assisting Leader in the obtaining of mortgage loans, and Leader had informed McGreevy that he would like to buy land in Columbus on which to build houses. Pie asked Mc-Greevy’s help in finding some available land with sewer and water improvements. McGreevy knew of plaintiff’s lots in River Ridge, and he assumed that they might be for sale. He introduced Leader to plaintiff, and negotiations followed between the two. Plaintiff consulted his brother with regard to an offer from Leader to purchase the 33314 lotSj and while Charles would have preferred to have held the lots longer for further appreciation in value, he deferred to plaintiff’s judgment that a bulk sale should be made to Leader. In October 1952, plaintiff and Leader reached an agreement of sale, the total sales price being $266,800, payable in installments. The initial payment of $80,000 was received by the brothers during plaintiff’s fiscal year 1953, and the remainder of $186,800 was received by them in plaintiff’s fiscal year 1954.

13. The other sale by plaintiff and Charles of a substantial number of their River Ridge lots was to Arlington Ridge Development Co. (the contract of sale was entered into on September 21, 1951). That corporation was organized by plaintiff in September 1951 to build houses on 100 lots in River Ridge because by that time the county was in the process of installing water mains, sewers, and roads. On September 13,1951, plaintiff wrote a letter on the Development Company’s letterhead to the Franklin County Sanitary Engineer, stating:

We are anticipating immediate construction of 450 houses which will be served by your River Ridge Water Improvement No. 339.
These houses will be sold primarily to Veterans and due to the proximity of this location to the General Motors plant and the new Westinghouse electric plant, we feel that the construction of these units will be or considerable importants [sic] to the defense effort. Anything that your department can due [sic] to accelerate the construction of this work will be greatly appreciated.
This work carries a priority #CMP6, XT — T issued by the C.M.P.

Plaintiff wrote the above letter at the request of a county official because he understood it would be helpful to the county in obtaining scarce materials for the construction work. He testified that in the wording of the first paragraph of the letter he had not intended to convey the impression that Arlington Nidge Development Company intended itself to build 450 houses but rather that he anticipated there would be immediate construction of 450 houses in the area to be served by the improvements.

In June of the following year, plaintiff and Charles, sold 100 lots in River Ridge to the Development Company for $79,200. Under plaintiff’s general supervision, the Development Company constructed 50 to 60 houses on the lots, 'but because the county improvements were still only partially completed, the houses did not sell very well. Of the remaining lots, about 15 were sold 'by the Development Company to the Columbus Home Builders Association for a Parade of Homes; 20 lots were sold 'by the Development Company to a man named Aleshire who was one of the builders in the Parade of Homes; and ten were sold by the Development Company to Kay Investments, Inc., the stock of which was owned by plaintiff. Kay Investments, Inc. had been formed in order that an interested purchaser, who was in the real estate business, could either acquire directly ten houses the Development Company intended to build on the lots, or if desired, could acquire instead the stock of Kay Investments. In order to save trouble and conveyancing costs, many of the 100 lots were deeded directly by plaintiff to the purchaser, rather than to Arlington Ridge Development Company and then to its purchaser. However, the actual contracts of sale were in the name of the Development Company as seller.

14. During the 12-year period, 1942 through 1953, inclusive, plaintiff had never sold vacant or unimproved real estate (other than the lots here involved) except for six isolated sales under special circumstances with no relevance to the issues herein. However, during this period of time, 'he made many transfers of unimproved land at his cost to several corporations which he owned or controlled. All corporations owned or controlled by plaintiff, the nature of the business, year of organization, and plaintiff’s stock interest therein are set forth in the following tabulation:

Columbus Southern Development Company, Arlington Eidge Development Company, and Martha Washington Builders, Inc. engaged extensively in the construction of houses on unimproved real estate transferred to them either by plaintiff or others. The improved real estate was held by these corporations primarily for sale to customers in the ordinary course of their trade or business.

15. Prior to 1946, plaintiff had acquired various unimproved lots for the purpose of constructing houses thereon. During 1946 in his individual capacity, plaintiff sold 50 houses, and during 1947 he sold 4 houses, all of which he had constructed on lots acquired 'by him in previous years. Subsequent thereto, however, plaintiff in his individual capacity constructed no houses for sale. Beginning with the organization of Columbus Southern Development Company, his wholly-owned corporations thereafter took over the construction and sale of houses.

16. In the years at issue, plaintiff’s income was derived from the following sources and was in the following amounts:

(a)Fiscal year ended June 30,1951:
Partnerships _$13,145.93
Salaries:
Columbus Southern Lumber Co_ 14, 817. 32
Martha Washington Builders, Ine_ 2, 600.00
Ashland, Inc_ 1,800. 00
Tibbals Mooring Co_ 11, 600.00
Dividends- 453. 00
Capital Gains_ 198.72
Biver Ridge lot sales_ 724.17
Total_ 45,339.14
(b)Mscal year ended June 30,1952:
Partnerships_ $6, 736.80
Salaries:
Ashland, Inc_ 2, 400.00
King Avenue, Inc_ 2,000.00
Columbus Southern Development Co_ 3,000.00
Columbus Southern Lumber Co_ 15, 827. 82
Lincoln Management Co_ 1,400.00
Martha Washington Builders, Inc_ 2,950.00
Parklawn Manor- 600. 00
Tibbals Mooring Co_ 21,677.10
Capital Gains_ 25,265.59
Miscellaneous (Interest, Dividends, etc.)_ $7,061.89
Biver Ridge lot sales_ 35,808.52
Total _ 124, 727. 72
(c)Fiscal year ended June 30,1953:
Partnerships _$12,831.31
Salaries:
Ashland, Inc_ 2,400. 00
King Avenue, Inc_ 2,400. 00
Columbus Southern Development Co_ 3, 300. 00
Columbus Southern Lumber Co_ 11, 651.24
Martlia Washington Builders, Inc- $3,120.00
Parklawn Manor_ 2,700.00
Tibbals Flooring Co_ 13,972.22
Capital losses- (11,300.00)
River Ridge lot sales (Installment on Leader sale)_ 36,208.51
Miscellaneous_ 10, 313. 83
Total _ 87,597.11
(d) Fiscal year ended June 30s 1954:
Partnerships _$15,456. 61
Salaries :
Ashland, Inc- 2,400.00
King Avenue, Inc- 2,400. 00
Columbus Southern Lumber Co- 13, 913.11
Martha Washington Builders, Inc- 3,120.00
Parklawn Manor- 3, 500. 00
Tibbals Flooring Co- 15,050.44
Beechwoods, Inc- 1,200. 00
Miscellaneous_ 14,358. 92
Capital Gains_ 140,232.33
River Ridge lot sales (Final installment on Leader sale)- 84,546. 89
Total _ 296,178.30

17. The plaintiff reported in his joint income tax return for the fiscal year 1953 as long-term capital gains, one-half of the gains realized from the aforesaid sales of the two lots to Cozy Cottages and the 100 lots to the Development Company in the respective amounts of $724.17 and $35,808.52. The aforesaid gain of $724.17 realized from the sale of the two lots and the gain of $35,808.52 are taxable to the plaintiff for his respective fiscal years 1951 and 1952 rather than for the fiscal year 1953 for which they were reported by the plaintiff.

The plaintiff elected in his joint income tax returns for his fiscal years 1953 and 1954 to report as a long-term capital gain the one-half of the gain which was realized by the plaintiff from the sale to Leader of the aforesaid 333% lots on the installment method under Section 44 of the Internal Eevenue Code of 1939. Of the gain computed and reported, $36,208.51 was reported in the 1953 return and the balance thereof was reported in the 1954 return.

18. (a) In his determination of the income taxes, penalties, and interest here involved, the Commissioner of Internal Revenue held and determined that in the joint acquisition and sale of the aforesaid real estate by plaintiff and Charles, they acted in copartnership within the meaning of Section 3797 of the Code in which each owned a one-half interest and that the aforesaid gains constituted ordinary income of the alleged partnership which the Commissioner computed on a fiscal year ended June 30. In so doing, he rejected the application of the installment method to the gain of $241,510.60 realized from the sale of the aforesaid 333% lots. Pursuant to such determination the Commissioner included the aforesaid gains of $1,448.34, $71,617.03, and $241,510.60 in said alleged partnership’s ordinary income for its respective fiscal years 1951, 1952, and 1953. In computing the alleged partnership net income for the fiscal years 1951 and 1953, the Commissioner allowed as deductions the respective amounts of $2,276.80 and $9,314.41, representing the real estate taxes paid on said lots by the plaintiff and eliminated the deduction thereof taken by the plaintiff in his respective returns for the fiscal years 1951 and 1953. The net income of the alleged partnership so determined was as follows:

1951 Income from sale of lots_ $1,448. 34
Deduction — Heal estate taxes_ 2,276. 80
Ordinary net loss_ 828.46
1952 Ordinary net income from sale of lots_ 71,617. 03
1953 Income from sale of lots_241,510.03
Deduction — Real estate taxes_ 9,314.41
Ordinary net income- 232,196.39

One-half of the alleged partnership’s loss for 1951 was allowed as a deduction and one-half of its net income for the years 1952 and 1953 was included in plaintiff’s gross income by the Commissioner in computing plaintiff’s net income for the respective fiscal years 1951,1952, and 1953.

Defendant has now conceded that plaintiff and his brother, Charles, did not engage as partners in the purchase and sale of the River Ridge lots and that the gains from the sales of those lots were properly reported by plaintiff in installments. However, the parties remain at issue on the question of whether those gains were taxable to plaintiff as ordinary income or as long-term capital gains.

(b) Plaintiff held his one-half interest in the property sold to Cozy Cottages, Inc. and to Arlington Ridge Development Company primarily for sale to customers in the ordinary course of his real estate business.

(c) Plaintiff did not hold his one-half interest in the property sold to Lewis Leader primarily for sale to customers in the ordinary course of his trade or business. He held this property, for some time prior to the sale to Leader, as an investment.

Sale of Parklawn Stock

19. Parklawn Manor, Inc. (hereinafter “Parklawn”) was incorporated under the laws of Ohio on or about October 20, 1950, and plaintiff thereupon acquired, at a cost of $1,000, all of its 100 shares of no-par common stock. Its 100 shares of 5 percent preferred stock with a par value of $100 per share were acquired by the Federal Housing Administration (FITA) for $100. FHA has owned such preferred shares at all times material hereto. Plaintiff was the president of the corporation, and George H. Chamblin was its secretary. Parklawn was organized to engage in the business of constructing, owning, and operating rental residential property, and for such purpose it acquired from another one of plaintiff’s corporations for $35,000 a tract of vacant land, consisting of 40.92 acres located at the northeast corner of Bagshaw Road and Broad Street in the City of Columbus, Ohio. With financing guaranteed by FHA, Parklawn constructed during 1950 and 1951 what is known as an FHA 608 residential housing project under the name of Parklawn Manor. It consisted of 384 family units, made up of 120 buildings containing two units each and 36 buildings containing four units each. The construction of all the housing units was completed, and they were occupied in their entirety, before the end of 1951.

20. Lincoln Management Co. (hereinafter “Lincoln”) was incorporated under the laws of Ohio on April 5, 1951, by C. E. Tibbals, Sr., father of plaintiff, immediately after he had sold out another business, to engage in the rental and management of rental real estate. Lincoln set up the original rental program for Parklawn Manor and procured all of the original tenants for the project under a contract with Parklawn which expired in April 1952. C. E. Tibbals, Sr., was president of Lincoln, directed its activities in renting the Parklawn units, and until January 12,1953, owned all of its outstanding capital stock consisting of five shares with par value of $100 per share. Since January 12, 1953, all of the stock of Lincoln has been owned by a trust created on that date by C. E. Tibbals, Sr., in which he designated the children of the plaintiff as primary beneficiaries and George H. Chamblin as trustee.

21. In August 1953, Chamblin suggested to plaintiff and his father that plaintiff sell his stock in Parklawn to Lincoln. Shortly prior thereto, Tibbals, Sr. had complained to Chamblin that neither he nor Lincoln (of which he was then president) had enough to do. Also, Lincoln had some excess assets available, and Chamblin was concerned as trustee of the Tibbals Sr. trust which owned all the stock of Lincoln that its assets be put to profitable use. It therefore occurred to Chamblin that, in view of Lincoln’s prior experience in procuring the tenants of Parklawn, it would be a sensible thing for Lincoln to acquire the stock of Parklawn, and take over its operations. He thereupon communicated this suggestion to plaintiff whose initial reaction thereto was one of surprise. Prior to this time, plaintff had given no thought to selling his Parklawn stock. However, upon considering the Chamblin suggestion further and after discussing it with his father, he concluded that the idea was a good one and should be executed.

22. After some discussions between Chamblin, plaintiff, and his father, an agreement was entered into between plaintiff and Lincoln by which his 100 shares of common stock in Parklawn were sold to Lincoln on August 31, 1953 for $46,-200, and Tibbals, Sr. thereupon became president of Park-lawn. Some preliminary efforts had been made to arrive at a price fair to both parties in view of the family relationships involved. To assist him in arriving at such price, the plaintiff obtained (1) a determination by Parklawn’s accountant of the book value of the stock, and (2) an appraisal of Park-lawn’s real estate by Emerson C. Wollam, a member of the American Institute of Peal Estate Appraisers and one-time president of the Columbus Board of Eealtors. The book value of all the outstanding stock (including the 100 shares of 5 percent preferred stock owned by FHA) as determined by Parklawn’s accountant at the time was $46,220.30. The items reflected in such book value are as follows:

The Wollam appraisal showed a valuation for the fixed assets of $2,510,000, made up of $280,000 for land and $2,230,000 for the other properties. Because of his belief that Wollam had appraised the land too high, plaintiff concluded that book value represented fairly the true value of the stock at the time. Chamblin thought that the price based on book value was fair to tbe trust. He was influenced in this belief by his conviction that, due to substandard construction in Park-lawn Manor, the gross rentals could be expected to decline in the future. Actually, as shown by the earnings table in the next succeeding finding, the gross rentals increased during the next nine years. As a matter of hindsight, therefore, the conclusion is justified that the sale at book value resulted in a bargain to the trust. However, plaintiff and Chamblin did not consider it as such in August 1953.

23. During the fiscal years 1951 to 1962, inclusive, Park-lawn produced gross rentals, sustained depreciation, paid interest on mortgage, realized net income, paid Federal income taxes, and realized net income after income taxes as adjusted by the Internal Revenue Service, as follows:

These figures reflect a depreciation deduction for the fiscal year ended September 30,1952, for only one-half year. They also reflect inclusion in income for tax purposes of advance rentals paid by tenants of approximately $11,500 per year for services Which were actually furnished by the corporation in the subsequent year. The inclusion of such advance rentals in income each year (except the first year of full occupancy) is approximately offset by the exclusion of advance rentals received during the prior year for service in the current year.

24. The total net income before income tax realized by Parklawn from the date of incorporation to the date plaintiff sold his stock was $137,799.62. Using the Wollam appraisal referred to above, a sale of Parklawn’s fixed assets on the date plaintiff sold his stock would have resulted in further gain to Parklawn of $22,225. ($2,510,000 less adjusted tax basis for the assets of $2,487,775.) Hence, on this basis prior to plaintiff’s sale of his stock on August 31, 1953, Parklawn had already realized a substantial part of the net income to be derived from the property constructed by it.

25. There is another method of estimating, through hindsight, the net income to be derived from the property by projecting average net income over the estimated life of the property. When such projection is done under this record, the following figures result. Parklawn’s average annual net income before taxes for the fiscal years ending September 30, 1952 through September 30,1962 was approximately $32,000. The estimated useful life of the buildings was 33% years. Therefore, assuming no change in the rental market and no damage to or destruction of the property during that period of time, the total net income to be derived from the property as a continuing operation could reasonably be estimated to aggregate nearly $1,067,000. As stated, Parklawn’s net income through August 31, 1953, was $137,799.62, or about 13 percent of total estimated net income to be derived from the property as a continuing operation under the assumptions stated. Using this hypothetical method of computation, Parklawn would not hare realized a substantial part of the net income to be derived from the property prior to August 31, 1953.

26. Since August 31, 1953, the 100 shares of Parklawn stock formerly owned by plaintiff, have been continuously owned by Lincoln, and all of the stock of Lincoln has been continuously owned by the trust created on January 12,1953 by C. E. Tibbals, Sr., previously referred to in finding 20, supra.

27. Prior to August 1953, plaintiff bad no intention of selling his 100 shares of stock in Parklawn, nor did he at any time prior thereto contemplate, either conditionally or unconditionally, a sale or an exchange of such stock or a liquidation of Parklawn, or contemplate such sale, exchange, or liquidation as a recognized possibility, or have any purpose, hope or expectation of such a sale or exchange or liquidation.

28. In his income tax return filed for the fiscal year 1954, plaintiff reported a long-term capital gain of $45,200 from the aforesaid sale of his stock in Parklawn. However, the Commissioner of Internal Revenue included the total amount of $46,200 received 'by plaintiff from the sale of his aforesaid stock in plaintiff’s ordinary income for the fiscal year 1954 “as a dividend, under the provisions of Section 115(a) and/ or as gain from the sale of assets other than capital assets, under the provisions of Section 117 (m) of the Internal Revenue Code (1939).” The resulting tax deficiencies were duly paid by plaintiff.

29. Claims for refund of the taxes, penalties, and interest involved herein were timely filed on December 27,1957. By registered letter dated April 26, 1960, the Commissioner of Internal Revenue notified the plaintiff of the disallowance of said claims for refund. The petition herein was timely filed on September 6,1960.

30. No part of the amount claimed in these proceedings has ever been refunded to the plaintiff or credited to plaintiff’s account. No action on the claims other than stated in this action has been taken by the Congress or any of the departments of the United States or in any judicial proceeding. Plaintiff is the sole and absolute owner of each and all the claims involved and plaintiff has not assigned or transferred the claims, or any of them, or any part thereof.

CONCLUSION OK Law

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiffs are entitled to recover. Judgment will be entered for plaintiffs with the amount of recovery to be determined pursuant to Bule 47 (c).

In accordance with the opinion of the court and a stipulation of the parties, it was ordered on November 14, 1966, that judgment be entered for the plaintiffs for $124,814.24, together with interest thereon as provided by law from the respective dates of payment as set forth below: 
      
      A number of other issues raised by the petition have been disposed of by an Agreement of Partial Settlement filed prior to the trial. The effect of this partial settlement on the amount of any final judgment will be reflected in the subsequent proceedings pursuant to Rule 47(c).
     
      
       Most of the statement of facts in this Part is taken from Commissioner Fletcher’s opinion although we have another view as to the taxation of the proceeds of two of the three sales.
     
      
      
         The word refers to Todd Tibbals. His wife, Helen, is a party to the action only because she filed joint tax returns with her husband.
     
      
       Charles lived in Tennessee where he managed a hardwood flooring manufacturing company. He and plaintiff owned that company in equal shares.
     
      
       The 1950 purchase was of a tract comprising 357 lots. In 1951, pursuant to an option held by plaintiff, the brothers enlarged their holdings by the purchase of an additional 79 lots in the subdivision for a total acquisition of 436 lots.
     
      
      At this time plaintiff was not aware that there was a considerable sewer development underground in the subdivision.
     
      
      
         The oral agreement between the brothers was later reduced to writing at Chamblin’s suggestion. See finding 6, infra.
      
     
      
       The one-lialf lot discrepancy apparently arose out of the second purchase of 79 lots by plaintiff and Charles in February 1951. It is of no moment here.
     
      
      
        Gordy v. Commissioner, 36 T.C. 855 (1961), on which plaintiff leans heavily, is distinguished in Browne v. United States, supra.
      
     
      
       Along Tiltil many others, this court has pointed out “that one may conduct his business through others.” Boeing v. United States, 144 Ct. Cl. 75, 87, 168 F. Supp. 762, 769 (1958).
     
      
       The Development Company was organized to build houses on 100 lots in Eiver Eidge, and plaintiff has denied that either he or his companies intended to build more.
     
      
      As the Tax Court observed, in Charles Tibbals’ case, regarding the sale to Leader: “Absence of motive to mate a greater profit is an element indicating that the property was not held primarily for sale to customers in the ordinary course of trade or business.” Tibbals v. Commissioner, 17 T.C.M. 228 (see finding 7).
     
      
       See Surrey, Definitional Problems in Capital Gains Taxation, 69 Harv. L. Rev. 985, 1002 (1956).
     
      
       After considerable overhauling, the section now appears as section 341 of the 1954 Code.
     
      
       “(3) under section 117(m) (2) (A), the corporation must be formed or availed of with a view to the action therein described, that is, the sale or exchange of its stock by its shareholders, or a distribution to them, prior to the realization by the corporation manufacturing, constructing, producing, or purchasing the property of a substantial part of the net income to be derived from such property, and the realization by the shareholders of gain attributable to such property. This requirement is satisfied in any case in which such action was contemplated by those persons in a position to determine the policies of the corporation, whether by reason of their owning a majority of the voting stock of the corporation or otherwise. The requirement is satisfied whether such action was contemplated unconditionally, conditionally, or as a recognized possibility.”
      “(4) A corporation is formed or availed of with a view to the action described in section 117 (m) (2) (A) if the requisite view existed at any time during the manufacture, production, construction, or purchase referred to in that section. Thus, if the sale, exchange, or distribution is attributable solely to circumstances which arose after the manufacture, construction, production, or purchase (other than circumstances which reasonably could be anticipated at the time of such manufacture, construction, production, or purchase), the corporation shall, in the absence of compelling facts to the contrary, be considered not to have been so formed or availed of. However, if the sale, exchange, or distribution is attributable to circumstances present at the time of the manufacture, construction, production, or purchase, the corporation shall, in the absence of compelling facts to the contrary, be considered to have been so formed or availed of.”
     
      
       Cardozo, J., dissenting in United States v. Constantine, 296 U.S. 287, 299 (1935).
     
      
       Actually, this figure was understated by some $3,300 due to an error by the company’s accountant in computing the depreciation deduction.
     
      
       Presumably, the failure to press the dividend theory is due to the fact that, under the transaction described above, plaintiff received nothing from Parklawn when he sold its stock, and he was not a stockholder of Lincoln. Cf. Rev. Rui. 55 — 15, 1955-1 C.B. 361, revoked by Rev. Rul. 59-97, 1959-1 C.B. 684.
     
      
       See Burge v. Commissioner, 253 F. 2d 765 (4th Cir., 1958) ; Glickman v. Commissioner, 256 F. 2d 108 (2d Cir., 1958) ; and Sidney v. Commissioner, 273 F. 2d 928 (2d Cir., 1960). Cf. Braunstein v. Commissioner, 305 F. 2d 949 (2d Cir., 1962), aff'd 374 U.S. 65 (1963) and Commissioner v. Solow, 333 F. 2d 76 (2d Cir., 1964). In the latter case, the court refers to its earlier comments on this subject as “dictum.” 333 F. 2d 80.
     
      
       No reported case involving this issue has been found wherein the lapse of time between completion of construction and the sale of stock was anywhere near as long. The cases decided adversely to the taxpayer disclose time intervals ranging from one month (Sidney v. Commissioner, 273 F. 2d 928 (2d (Cir., 1960)) to a maximum of twelve months (Tobias v. Commissioner, 40 T.C. 84 (1963)).
     
      
       Moreover, had plaintiff been thinking in terms of the collapsible corporation provisions of the Code, it is logical to infer that he would have postponed the sale of his Parklawn stock until the end of 1954. By that time, of course, three years would have elapsed since completion of construction, and the exception specified in section 117(m)(3)(C) would have clearly removed the sale from collapsible treatment. Standing alone, his failure to so postpone the sale might have little significance, but when coupled with the other facts of record discussed above, it lends credence to his testimony that prior to August 1953 he had no “view” to sell.
     
      
       Subsequent earnings of Parklawn indicate that itse stock was probably worth more than the book value of $46,200. See findings 22, infra.
      
     
      
      The same is true of Browne v. United States, 174 Ct. Cl. 523, 356 F. 2d 546 (1966).
     
      
      "2 It is true that in the present case, record title to many of the 100 lots sold by plaintiff and Charles to Arlington Ridge Development Company remained in plaintiff’s name, and upon a sale by the Development Company the deed of conveyance ran directly from plaintiff to the purchaser although plaintiff did not receive the purchase price. Plaintiff’s local attorney testified that this was merely a short-cut to avoid the trouble and expense of two deeds. In any event, defendant does not appear to dispute the validity of the brothers’ sale to the Development Company. Under Ohio law, from the time of that contract of sale, the company was the owner of the land by equitable conversion. See Berndt v. Lusher, 40 Ohio App. 172, 178 N.E. 14 (1931).”
     
      
       Helen A. Tibbals is a party to this action only by virtue of her having filed joint tax returns with her husband. As used hereinafter, the word “plaintiff” refers to Todd Tibbals.
     
      
      
         The word “unimproved” is used here in the sense that the land had no improvements above-ground. The record shows that many of the lots in the tract were accessible to existing sewer improvements.
     
      
       At this time he was not aware that there was a considerable sewer development underground.
     
      
       Prior to closing the sale, a dispute arose between plaintiff and the seller regarding delinquent real estate taxes on the property. The matter was eventually settled by granting plaintiff and his brother the right to acquire an additional 79 lots owned by officers of Arlington Ridge Realty Co. for approximately $13,000.
     
      
       At that time the Development Company owned no lots at all in River Ridge, and the entire holdings of plaintiff and his brother totaled only 436 lots.
     
      
       It has been stipulated, however, that the correct booh value of all the stock as of August 31, 1953, was $49,571, the difference being accounted for by the fact that, in the original computation at the time, there was erroneously deducted twelve months’ depreciation for the 11 months ended August 31, 1953.
     
      
       There can be little doubt that an indeterminate portion of tbe Increases reflected an inflationary trend in the cost of housing generally during tbe period described.
     