Paul Dauphinais v. Minister of National Revenue, [1993] 1 CTC 2056, [1993] DTC 624, [1993] 1 CTC 2488

Lamarre Proulx, T.C.CJ.:— The appellant has appealed the income tax reassessments of the respondent, the Minister of National Revenue (the"Minister") for 1984, 1985 and 1986.

The main issue is whether the gains from the sale of properties are capital gains or income. In other words, it has to be determined whether at the time of the acquisition the possibility of reselling at a profit was an operating motivation in the purchase.

There is also a preliminary issue concerning 1984: whether the three-year time limit prescribed in paragraph 152(4)(c) of the Income Tax Act, R.S.C. 1952,

c. 148 (am. S.C. 1970-71-72, c. 63) (the"Act") had expired.

The facts on which the respondent relied in assessing the appellant are described in paragraph 5 of the reply to the notice of appeal, as follows:

(a) the appellant was a butcher employed on salary by Steinberg Inc. during the years in issue;

(b) on May 6, 1982, the appellant and Mr. Jean-Claude Trébalag, a real estate agent by profession, purchased a property located at 3080, rue Bolduc in Montréal, at a price of $650,000;

(c) on December 7, 1984, the appellant and Mr. Jean-Claude Trébalag disposed of the property for $785,000;

(d) on March 20, 1985, Invest Uni Enr., composed of Messrs. Michel Dauphinais, Paul Dauphinais, Gaétan Sénécal and Jean-Claude Trébalag, purchased a property located at 2665, rue Frontenac in Montréal, from "Les Investissements Heda" for $975,000;

(e) on November 4, 1985, the appelant and his partners sold the property for $1,165,000;

(f) on April 15, 1986, Mr. Paul Dauphinais and Gestion Doge Enr., in which Mr. Gaétan Sénécal and Mrs. Doris Dauphinais were partners, acquired a property located at 2154 Dollard, Longueuil, Quebec, for $565,000;

(g) on May 22, 1986, the appellant and his partners sold the property for $690,000;

(h) from 1975 to 1987, the appellant purchased eight properties, seven of which were sold;

(i) in the course of these transactions, the appellant was in partnership with people who were knowledgeable about real estate;

(j) one of the operating factors in the purchase of these properties was to resell at a profit.

[Translation.]

The facts as described by the appellant in his notice of appeal were as follows:

5. That the appellant has no training in real estate and that at the time he held full- time employment as a butcher in a grocery chain.

6. That the appellant has always wanted to acquire a property and keep it for longterm ownership, which would constitute savings or an asset for him at the time of his retirement.

7. That the appellant and Mr. Jean-Claude Trébalag acquired two properties in 1982 for the above-mentioned purposes.

8. That during 1984 the appellant had to look after renting the apartments alone, as well as maintaining the properties and other problems relating to his properties, given the lack of interest and participation on the part of his partner Mr. Trébalag.

9. That as a result of his other professional, social and family activities, the appellant was incapable of properly operating and making a profit from his properties.

10. That the appellant then decided with his partner to sell the two properties, bearing municipal numbers 3080 and 3090, rue Bolduc in Montréal, on December 7,1984.

11. That as a result of this transaction the appellant realized a capital gain within the meaning of the Income Tax Act.

12. That in 1985 the appellant reinvested his assets in real estate in order to achieve the objectives that he had established earlier.

13. That the appellant then, with other individuals, acquired a rental income property of 53 apartments, bearing municipal number 2665, rue Frontenac in Montréal.

14. That once possession had been taken the appellant found that major repairs had to be made involving the roofing, the plumbing and the elevators, thus requiring additional investment.

15. That the appellant found that some of his partners did not have the necessary income or the solvency required to obtain financing for the additional investment which was necessary to protect this asset.

16. That during this period, and without solicitation on his part, a real estate agent contacted the appellant to acquire the property.

17. That in view of the insolvable problems foreseen at that time, and also the desire of the other partners to dispose of the property, the appellant had to agree to sell the property on November 4, 1985.

18. That the income from that transaction must be considered to be a capital gain within the meaning of the Income Tax Act.

19. That the appellant with other partners acquired a rental income property of twenty-four apartments located at 2154, rue Dollard in Longueuil, on May 12, 1986.

20. That shortly after this acquisition the appellant was approached by a real estate broker.

21. That a client of that broker immediately submitted an offer to purchase the said property.

22. That in view of the offer which had been made and of the market at that time which favoured owners, the appellant and his partners realized a substantial profit as a result.

23. That the real estate market was very active during that period.

24. That the sale of this property took place on May 22, 1986.

25. That the income from this transaction must also be considered as a capital gain and not as income from a business.

26. That at no time during 1984, 1985 and 1986 did the appellant have any intention whatsoever to deal in real estate or engage in real estate speculation.

27. That market conditions and problems relating to his partners meant that at certain points he had to dispose of real estate assets.

28. That at no time was the appellant able in terms of his day to day activities to organize himself to be able to engage in real estate speculation or to deal in real estate.

29. That for the reasons set out above the income from the dispositions of the properties at 3090, rue Bolduc in Montréal, 2665, rue Frontenac in Montréal and 2154, rue Dollard in Longueuil, must be considered to be capital gains.

30. That the notice of assessment of July 12, 1988 was issued more than three years after the respondent's first notice of assessment for the 1984 taxation year, dated July 12, 1985.

31. That the notice of assessment of July 12, 1988 must be set aside because it is prescribed.

32. This appeal is well-founded in fact and in law.

[Translation.]

Preliminary issue

Let us first consider the question of whether the assessment was issued one day too late for 1984.

Solicitor for the appellant argued, relying on subsection 27(3) of the Interpretation Act, R.S.C. 1985, c. 1-21, that the correct interpretation of paragraph 152(4)(c) of the Act is that since the day of the original assessment was July 12, 1985, the time limit expired on July 11, 1988.

To assist in understanding this debate, I shall reproduce both versions of section 27 of the Interpretation Act in full, as well as the provisions of the Act which apply here.

1. Where there is a reference to a number of clear days or "at least” a number of days between two events, in calculating that number of days the days on which the events happen are excluded.

2. Where there is a reference to a number of days, not expressed to be clear days, between two events, in calculating that number of days the day on which the first event happens is excluded and the day on which the second event happens is included.

3. Where a time is expressed to begin or end at, on or with a specified day, or to continue to or until a specified day, the time includes that day.

4. Where a time is expressed to begin after or to be from a specified day, the time does not include that day.

5. Where anything is to be done within a time after, from, of or before a specified day, the time does not include that day.

1. Si le délai est exprimé en jours francs ou en un nombre minimal de jours entre deux événements, les jours où les événements surviennent ne comptent pas.

2. Si le délai est exprimé en jours entre deux événements, sans qu’il soit précisé qu'il s'agit de jours francs, seul compte le jour où survient le second événement.

3. Si le délai doit commencer ou se terminer un jour déterminé ou courir jusqu'à un jour déterminé ce jour compte.

4. Si le délai suit un jour déterminé, ce jour ne compte pas.

5. Lorsqu'un acte doit être accompli dans un délai qui suit ou précède un jour déterminé, ce jour ne compte pas.

The English and French versions of subparagraph 152(4)(a)(ii) and paragraph 152(4)(c) of the Act read as follows in 1984:

The Minister may at any time assess tax, interest or penalties under this Part or notify in writing any person by whom a return of income for a taxation year has been filed that no tax is payable for the taxation year, and may

(ii) has filed with the Minister a waiver in prescribed form within three years from the day of mailing of a notice of an original assessment or of a notification that no tax is payable for a taxation year.

Le ministre peut, à une date quelconque, fixer des impôts, intérêts ou pénalités en vertu de la présente Partie, ou donner avis par écrit, à toute personne qui a produit une déclaration de revenu pour une année d'imposition, qu'aucun impôt n'est payable pour l’année d'imposition, et peut,

(ii) a addressé au ministre une renonciation, en la forme prescrite, dans un délai de trois ans à compter du jour de l'expédition par la poste d'un avis de première cotisation ou d'une notification portant qu'aucun impôt n'est payable pour une année d'imposition,

(c) within 3 years after the day referred to in subparagraph (a)(ii), in any other case,

(c) dans un délai de 3 ans à compter du jour visé au sous-alinéa a) ii), dans tous les autres cas,

[Emphasis added.]

The French version of subparagraph 152(4)(a)(ii) was amended in 1985 at the time of what seems to have been a general revision of the French version of the Act, to read as follows:

(ii) a addressé au ministre une renonciation, selon le formulaire prescrit, dans un délai de trois ans de la date de mise à la poste d'un avis de première cotisation ou d'une notification portant qu’ucun impôt n'est payable pour une année d'imposition,

[Emphasis added.]

It should be noted that paragraph 152(4)(c) was not amended.

In 1988, paragraph 152(4)(c) was again amended to read as follows, in both versions:

(c) within 3 years after the day referred to in subparagraph (a)(ii), in any other case,

(c) dans un délai de 3 ans à compter du jour visé au sous-alinéa a) ii), dans les autres cas,

Counsel for the appellant argued, first, that there is a difference between the English and French texts of paragraph 152(4)(ii) and paragraph 152(4)(c) of the Act, and he referred to the interpretation of bilingual texts; and second, if there is no difference, that the day a quo should be counted since Parliament considered it necessary to amend the English version of paragraph 152(4)(c) of the Act, possibly to make it consistent with subsection 27(5) of the Interpretation Act, cited above. This amendment, he argued, was made to exclude clearly the day a quo from the computation of the time limit, which day would previously have been counted, given the manner in which the text was drafted.

Counsel for the respondent referred to the decision of the Federal Court, Trial Division, in Burroughs v. The Queen, [1982] C.T.C. 414, 82 D.T.C. 6340, in which Mahoney, J. stated, at page 414 (D.T.C. 6341):

Such mailing, on July 29, 1981, was within four years of July 29, 1977. The reassessment was made in time.

In the Petit Robert, 1989 edition, at page 355, we find that in modern French "à compter de" (counting from) means “a partir de" (starting from), and the example given is "à compter d’aujourd’hui” (starting today). The English expression 'Trom" therefore, in my opinion, correctly translates the expression "à compter de" and the two versions of the provisions in question are not different.

This applies to the argument that the French version was different from the English version. Now, what of the argument that the English version, before it was changed in 1988, as well as the French version, meant that the day a quo was counted, since Parliament would have considered it necessary to amend the text in 1988, to comply, it is argued, with the requirements of subsection 27(5) of the Interpretation Act and thus exclude this day from the computation of the time limit.

With respect to the computation of time limits, I refer to Halsbury's Laws of England:!

Days included or excluded: When a period of time running from a given day or event to another day or event is prescribed by law or fixed by contract, and the question arises whether the computation is to be made inclusively or exclusively of the first-mentioned or of the last-mentioned day, regard must be had to the context and to the purposes for which the computation has to be made. Where there is room for doubt, the enactment or instrument ought to be so construed as to effectuate and not to defeat the intention of Parliament or of the parties, as the case may be. Expressions such as "from such a day" or “until such a day" are equivocal, since they do not make it clear whether the inclusion or the exclusion of the day named may be intended. As a general rule, however, the effect of defining a period in such a manner is to exclude the first day and to include the last day.

[Emphasis added.]

I refer also to the comments of the author Pierre-André Côté:

The other important question in time computations is the inclusion or exclusion of the first and final days of a specified time limit.

At common law, the rule is exclusion of the day on which the period begins and inclusion of the full day on which it expires. This principle is codified by the third paragraph of subsection 27(2) of the federal Interpretation Act, R.S.C. 1985, c 1-21. It should be set aside, however, if the legislator’s intention is demonstrated in the

Halsbury's Laws of England, Butterworth's, 4th Edition, volume 45, paragraph 1127.

The Interpretation of Legislation in Canada, 2nd edition, Pierre-Andre Côté. Les Editions Yvon Blais Inc., page 80.

use of expressions such as"not less than x days”, "at least x days","a minimum of x days","x clear days", etc.; in such cases, neither the first day (dies a quo) nor the final day (dies ad quem) is counted.

This rule has also been adopted by the Code of Civil Procedure in paragraph 8(1), which reads as follows:

In computing any delay fixed by this Code or any of its provisions, including the delays for appeal:

(1) The day which marks the start of the delay is not counted, but the terminal day is counted;

It may be that the question of the computation of the time limit was not raised in the Federal Court-Trial Division in Burroughs, cited above, since the decision discusses only the validity and date of sending of a notice of assessment sent through the United States postal system during a strike in the Canadian postal system. However, there was no doubt in the mind of the learned Federal Court judge that the day a quo is not included in computing the time limit.

The points raised by counsel for the appellant may at first glance seem to be valid, in view of subsections 27(3) and 27(5) of the Interpretation Act, cited above. However, I am of the opinion, relying on the doctrine cited, that subsection 27(3) of the Interpretation Act does not apply to the time limits set out in the provisions of the Act in question. The general principle set out in subsection 27(2) of the Interpretation Act for computing a time limit not expressed to be clear days is the principle which must prevail, because, in the provisions in issue here, the time limit is made up of days not expressed to be clear days which run between two events. In these cases the day a quo is not counted, but the day ad quem is counted.

We do not know the reasons why the text of the English version was changed in 1988. However, I do not consider this to be an indication that the general principles set out in subsections 27(1) and 27(2) of the Interpretation Act must be modified.

The circumstances described in subsections 27(3), 27(4) and 27(5) of the Interpretation Act are specific circumstances and it must be quite clear in the text of the statute that Parliament intended to exclude the general principles for computing time limits set out in subsections 27(1) and 27(2) of the Interpretation Act if those subsections are to apply. I see no specific indication by Parliament in the text of the statutory provisions in question which would permit me to derogate from the general principle for computing time limits, and accordingly I must reject the preliminary argument raised by the appellant.

The facts

It emerged from the evidence that the appellant worked as a butcher at the Steinberg store from 1974 to 1988. He started with a salary of $200 per week and finished with a salary of $500 per week. He now has his own butcher shop business where he employs a few employees.

He has been married since 1975. That year, he purchased a house in Laprairie. The house was sold the following year, in 1976, in order to purchase an eight-apartment building at a cost of $94,000. That building was resold on July 14, 1978, for $118,000.

On February 27, 1979, the appellant purchased an eleven-apartment building, on rue Notre-Dame de Grace in Longueuil, at a cost of $160,000, which was resold on October 31, 1982, for $185,000. In 1983, the appellant purchased a property on rue Westgate in Longueuil which he has kept to this date, and where he resides. From May 6, 1982 to April 15, 1986 the three properties in issue in this case were purchased. The following table illustrates these purchases:

On November 25, 1986, the appellant, with other people, purchased a 24- apartment building located on rue St-Georges in Ville Lemoyne for $802,400, which was resold on December 30, 1987 for $1,085,000.

Property on rue Bolduc

The property on rue Bolduc, one of the properties in issue in this case, was purchased with another buyer, Mr. Jean-Claude Trébalag, in the following circumstances: Mr. Jean-Claude Trébalag's wife was working with the appellant's wife at the Bank of Montreal, and this was how the two purchasers would have met. The property was composed of two buildings, one of which had 21 apartments and the other 23 apartments. The price was $650,000 and the two partners invested $55,000 as downpayment. There was no evidence as to where the funds for this cash payment had come from. In any event it must be noted that this was a downpayment of less than 10 per cent of the total amount. Responsibilities were divided: Mr. Trébalag looked after rentals, the appellant looked after keeping the books. This was done by mutual agreement, without any partnership arrangement. At the beginning that worked well, for perhaps a year and a half, although the statement of revenue and expenditures was not introduced in evidence by the appellant. Mr. Trébalag then encountered family problems and stopped looking after rentals. As for the appellant, who was employed full-time, he could not devote time to rentals, and so the apartments were not rented out as well and the rental business started to accumulate losses. He therefore decided that it would be better to sell the property on rue Bolduc.

Property on rue Frontenac

The property on rue Frontenac, another property in issue in this case, was a concrete 54-apartment building located near Sherbrooke Street in Montréal. The appellant had contacted Mr. Trébalag to propose that he be involved in the purchase. This purchase was made with Jean-Claude Trébalag, Gaétan Sénécal, the appellant's brother-in- law, and Michel Dauphinais, the appellant's brother. The amount was $975,000 and $140,000 was invested as downpayment. It is not very clear from the testimony who was to look after what, but the appellant looked after the accounting. However, there were problems which the appellant described as major, such as changing the intercom system, water problems in some places caused by defective pipes, and the potential expense of replacing the elevator, which would have cost $50,000. The rents did not bring in as much as anticipated, so that on two occasions each purchaser had to add $5,000 each. The result was that the building was resold eight months after the acquisition. One of the reasons for the sale was that the appellant's partners in the purchase did not want to invest more money, as a letter from Mr. Trébalag to Mr. Dauphinais dated July 15, 1985 demonstrated.

Property on rue Dollard

The property on rue Dollard, the other property in question, was purchased on the appellant's initiative. It emerged from the evidence that the sale occurred when an unsolicited offer was received. The appellants sold since the real estate agent was offering them $100,000 more than their acquisition price.

On November 25, 1986, the appellant, with Doris Dauphinais Sénécal, Mr. Gaétan Sénécal, Mr. André Latreille and Mr. Michel Dauphinais, acquired a 24- apartment building located on rue St-Georges in Ville Lemoyne. The acquisition price was $802,400 and the sale price on December 30, 1987 was $1,085,000. Again in this case the reason given for the sale was difficulties with tenants and problems with the air conditioning and heating system.

Counsel for the appellant referred to the following cases, inter alia:

B.C.W. Investments Ltd. v. M.N.R. (1963), 34 Tax A.B.C. 172, 64 D.T.C. 4;

The Queen v. Kyllo, [1976] C.T.C. 409, 76 D.T.C. 6235 (F.C.T.D.);

The Queen v. Sipila, [1977] C.T.C. 280, 77 D.T.C. 5179 (F.C.T.D.);

Wood v. M.N.R., [1977] C.T.C. 2303, 77 D.T.C. 5179 (T.R.B.);

Lee v. M.N.R., [1978] C.T.C. 2192, 78 D.T.C. 1152 (T.R.B.);

Hiwako Investments Ltd. v. The Queen, [1978] C.T.C. 378, 78 D.T.C. 6281

(F.C.A.);

Les Immeubles Roussin Ltée v. M.N.R., [1982] C.T.C. 2668, 82 D.T.C. 1683

(T.R.B.);

Martin & Frères Ltée v. M.N.R. (1955), 13 Tax A.B.C. 158, 55 D.T.C. 363

Counsel for the respondent referred to the following cases, inter alia;

Racine, Demers & Nolin v. M.N.R., [1965] C.T.C. 150, 65 D.T.C. 5098;

Happy Valley Farms Ltd. v. The Queen, [1986] 2 C.T.C. 259, 86 D.T.C. 6421.

Analysis

Can we conclude that the possibility of reselling at a profit was not an operating motivation in the purchase of the properties in question? On the subject of this concept of operating motivation, I would like to quote the comments of Mahoney, J. of the Federal Court of Appeal in Crystal Glass Canada Ltd. v. The Queen, [1989] 1 C.T.C. 330, 89 D.T.C. 5143 at page 330 (D.T.C. 5143):

The learned trial judge misstated the test of secondary intention propounded in Racine et al. v. M.N.R., C.T.C. 150, 65 D.T.C. 5098, when he asked himself "did Mr. Bean have in his mind the thought that he might sell at a profit?” Secondary intention requires not only the thought of sale at a profit but that the prospect of such a sale be an operating motivation in the acquisition of the capital property.

Le juge de première instance a mal énoncé le critère de l'intention secondaire exposé dans l'arrêt Racine et al. c. M.R.N., C.T.C. 150, 65 D.T.C. 5098, lorsqu'il s'est demandé «si M. Bean pensait qu'il pourrait vendre avec profit» [traduction]. L'intention secondaire exige non seulement l’idée de vendre avec profit mais aussi la perspective qu'une telle vente constitue un motif déterminant de l'acquisition du bien en immobilisation.

[Emphasis added.]

I would like to quote Noël, J. in Racine, Demers and Nolin, cited above, who best explained what must be understood by this concept of secondary intention as the operating motivation in the acquisition at page 159 (D.T.C. 5103):

In examining this question whether the appellants had, at the time of the purchase, what has sometimes been called a "secondary intention” of reselling the commercial enterprise if circumstances made that desirable, it is important to consider what this idea involves. It is not, in fact, sufficient to find merely that if a purchaser had stopped to think at the moment of the purchase, he would be obliged to admit that if at the conclusion of the purchase an attractive offer were made to him he would resell it, for every person buying a house for his family, a painting for his house, machinery for his business or a building for his factory would be obliged to admit, if this person were honest and if the transaction were not based exclusively on a sentimental attachment, that if he were offered a sufficiently high price a moment after the purchase, he would resell. Thus, it appears that the fact alone that a person buying a property with the aim of using it as Capital could be induced to resell it if a sufficiently high price were offered to him, is not sufficient to change an acquisition of capital into an adventure in the nature of trade. In fact, this is not what must be understood by a "secondary intention” if one wants to utilize this term.

To give to a transaction which involves the acquisition of a capital the double character of also being at the same time an adventure in the nature of trade, the purchaser must have in his mind, at the moment of the purchase, the possibility of reselling as an operating motivation for the acquisition; that is to say that he must have had in mind that upon a certain type ofcircumstances arising he had hopes of being able to resell it at a profit instead of using the thing purchased for purposes of capital. Generally speaking, a decision that such a motivation exists will have to be based on inferences flowing from circumstances surrounding the transaction rather than on direct evidence of what the purchaser had in mind.

[Emphasis added.]

What are the circumstances surrounding the transactions from which we may infer that the possibility of reselling at a profit was an operating motivation in the purchase? There has been a multitude of decisions on this point. I would like to quote Rouleau, J. in Happy Valley Farms, cited above, at page 263 (D.T.C. 6423-24):

Several tests, many of them similar to those pronounced by the Court in the Taylor case, have been used by the courts in determining whether a gain is of an income or capital nature. These include:

1. The nature of the property sold. Although virtually any form of property may be acquired to be dealt in, those forms of property, such as manufactured articles, which are generally the subject of trading are only rarely the subject of investment. Property which does not yield to its owner an income or personal enjoyment simply by virtue of its ownership is more likely to have been acquired for the purpose of sale than property that does.

2. The length of period of ownership. Generally, property meant to be dealt in is realized within a short time after acquisition. Nevertheless, there are many exceptions to this general rule.

3. The frequency or number of other similar transactions by the taxpayer. If the same sort of property has been sold in succession over a period of years or there are several sales at about the same date, a presumption arises that there has been dealing in respect of the property.

4. Work expended on or in connection with the property realized. If effort is put into bringing the property into a more marketable condition during the ownership of the taxpayer or if special efforts are made to find or attract purchasers (such as opening of an office or advertising) there is some evidence of dealing in the property.

5. The circumstances that were responsible for the sale of the property. There may exist some explanation, such as a sudden emergency or an opportunity calling for ready money, that will preclude a finding that the plan of dealing in the property was what caused the original purchase.

6. Motive. The motive of the taxpayer is never irrelevant in any of these cases. The intention at the time of acquiring an asset as inferred from surrounding circumstances and direct evidence is one of the most important elements in determining whether a gain is of a capital or income nature.

While all of the above factors have been considered by the courts, it is the last one, the question of motive or intention which has been most developed. That, in addition to consideration of the taxpayer's whole course of conduct while in possession of the asset, is what in the end generally influences the finding of the Court.

The frequency of the real estate transactions in which the appellant engaged, the short length of the period of ownership, the lack of perseverance in the face of problems inherent in property rentals, and the little interest shown in analyzing the return on the rentals are factors which indicate purchases of a speculative nature.

I do not see any element in the analysis of the facts which indicates transactions in the nature of capital, that is, the pursuit of a rental income which is viable in the long term and the diligent effort to obtain that rental income. Here, the appellant undoubtedly collects the rents but this is not his primary concern. That concern was to resell the properties which had been acquired at a good price.

The cases cited by counsel for the appellant, as counsel for the respondent noted, relate overall to isolated transactions or cases of unsolicited offers.

It is true that in the case of the property on rue Dollard the offer to purchase was unsolicited. However, I cannot conclude that at the moment this property was acquired the possibility of resale at a profit was not an operating motivation in the acquisition, for the reasons given above.

In two of the three properties in question, those on rue Frontenac and rue Dollard, one of the co-purchasers was Mr. Gaétan Sénécal, the appellant's brother-in-law. I made a decision on February 21, 1991 holding that the gain was a Capital gain. Mr. Sénécal was a police officer approaching retirement who wanted to make an investment. The property on rue Frontenac was his first acquisition, and there was an unsolicited offer for the property on rue Dollard.

The circumstances of this appeal are different. There is a history of real estate transactions, short periods of ownership and resale at a profit. This is not of course a criticism, but these are the characteristics of speculation, and the income from the real estate sales is thus income from a business and not income in the nature of capital.

The appeals are dismissed.

Appeals dismissed.