Evening star. [volume] (Washington, D.C.) 1854-1972, 1952-10-08
By jones {. Roper

The Government has lost an at
tempt to collect 1911. $50 in extra
taxes from Ambassador, Inc. al
corporation owned almost ex-
clusively by Morris Cafritz.
The United States Tax Court, it
was disclosed today, has ruled that
the firm does not owe the tax.
To decide the case, the Tax
Court had to investigate some of
Mr.. Cafritz' involved real estate
dealings during the last % years.
In that period. Mr.. Cafritz has
become the Districts best-known
real estate man, and his wife has
become the city's most spectacular
party -giver.
Billed on Excess Profits.
The Internal Revenue Bureau
billed Ambassador, Inc. for $118.-
557 excess profits taxes for 1914
and $253,102 excess profits taxes
for 1945.
Mr.. Cafritz appealed success
fully to the Tax Court. The case
hinged on profits the Cafritz
enterprises made in buying the
Corcoran Courts Apartments in
1885 and selling them in 1888 at a
profit of $252,273.
Mr.. Cafritz' attorneys argued
that this prewar profit was a
normal operating profit that gave
the Cafritz enterprises a big ex-
cess profits base. The Internal
Revenue Bureau argued that the
|Corcoran Courts profit was really
a capital gain and could not be
used in computing the Cafritz
normal" net. The Tax Court
ruled in favor of Mr.. CafritZ. This
gave him a big profit base and cut
his excess profits liability in post
war years.
History of the Courts.
The court decision related the
turbulent history Of the Corcoran
Courts at Twenty-Five and D
streets NV, now used as a State
Department annex.
MIR. Cafritz constructed the
eight-story apartment building in
1925 and 1925 and sold it a few
months later for about SIS mil
lion-at a profit of about $700. 900.
The new owners could not keep
up the mortgage payments, and
the building was sold at auction.
The Fourteenth Street Develop
ment Co., a Cafritz-run firm and
predecessor of Ambassador, Inc,
bought the Corcoran Courts in
1885 at $4,000. Three years
later, the Cafritz enterprises sold
the building to the Government
for 1851 900. The court said the
development company, after
spending some money for repairs,
netted $252,273 on the deal.
Information Detailed.
Mr.. Cafritz' attorneys, in order
to prove that this was profit
from normal business operations,
gave the court detailed informa-
ton about other Cafritz real es-
tate dealings.
The court decision said the
Fourteenth Street Development
Co.'S first big operation was crea-
ton of q subdivision near Four
Iteenth street and Parkwood place
NV. The firm sold SO houses at
prices ranging from $10,950 to
$15,950.
1.-THE company reacquired. upon
mortgage foreclosure proceedings,
is out of the SO houses" the court
said. after the company reac-
CURED these houses on mortgage
foreclosure proceedings, it reno
waited the properties and immedi-
ately attempted to sell them
again"
This evidence, the court said
tended to show the development
company was in the business OF
buying and selling real estate, just
las Mr.. Cafritz commended.
Other Buildings Put Up.
The development company also
|put up three apartment buildings:
Otis Gardens, at 1445 Otis place
NV, at a cost Of 1926, 480: Ogden
Gardens, at 1445 Ogden place
INV, at q cost Of $339.170. and
Park Crescent. at 29Ol Eighteenth