Court Opinion

ID: 4478397
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:03.030364+00
Date Added: 2024-06-11T14:53:55.908646
License: Public Domain

Murdock, J., dissenting: Clearly the petitioners were in the business of selling real estate but the cost of the sewage disposal plant should not be a part of the cost of the lots. The sewage disposal plant was owned by the Sanitary Company and the petitioners owned all of its stock. They would have reaped the benefits through that corporation if the operation of the plant had been profitable and they would have benefited similarly from a sale or disposition of the plant. This case is not distinguishable satisfactorily from Colony, Inc., 26 T. C. 30, even if the petitioners paid the cost of the construction of the sanitary plant themselves. I think the majority opinion on this point makes bad law. If the cost of the sewage plant was paid by money contributed to the Sanitary Company by the petitioners, either directly or constructively, the loss, if any, would be a loss of the corporation and the petitioners’ case for ignoring the corporation and deducting those' costs as their costs of the lots would be even weaker. The mere fact, if true, that there was no expectation of profit from the operation of the plant is not a determining factor and the fact that the operation of the sewage plant turned out to be unprofitable is immaterial. If the petitioners had desired to include the cost of the sewage disposal plant in the cost of the lots, they could have transferred the title to that plant in some way for the sole benefit of the lot owners but, instead, they retained title to that property for their own benefit through a wholly owned corporation. HaRRON, Withey, and DeeNNEN, //., agree with this dissent.