A
J
Frost:—This
is
an
income
tax
appeal
in
respect
of
the
1967
taxation
year
wherein,
by
reassessments
of
October
8,
1969
and
August
31,
1970,
appellant’s
taxable
income
was
readjusted
as
a
result
of
an
interest
in
the
sale
of
land.
This
appeal
was
heard
at
Calgary,
Alberta
on
September
30,
1971
by
the
Tax
Appeal
Board
as
it
was
then
constituted.
In
December
of
1958
Leo
Paperny,
Maurice
Paperny,
Harry
Sheftel
and
Norman
Libin
purchased
a
parcel
of
land,
known
as
the
Cox
Property
on
the
outskirts
of
Calgary
for
$83,400,
each
of
whom
held
an
undivided
one-quarter
interest
in
the
transaction.
The
said
property
was
a
160-acre
parcel
of
land
which
was
used
as
a
farm
located
northwest
of
the
city
in
an
area
and
subject
to
some
speculation
as
it
had
been
announced
that
the
University
of
Calgary
was
to
be
established
in
the
northwest
section
of
the
city
by
1960.
After
the
four
purchasers
acquired
the
land,
they
parcelled
it
out
to
members
of
their
families
and
acquaintances
bringing
the
number
of
participants
to
sixteen.
Prior
to
the
purchase,
Maurice
Paperny
had
indicated
to
the
appellant
that
he
was
interested
along
with
others
in
buying
the
Cox
farm
and
asked
him
if
he
would
like
to
participate
in
the
transaction.
The
appellant
agreed
and
was
permitted
to
acquire
a
10%
interest.
It
is
the
gain
realized
on
this
10%
interest
that
is
the
subject
matter
of
this
appeal.
The
appellant
who
had
little
experience
in
real
estate
transactions,
except
in
his
capacity
as
a
solicitor,
testified
that
he
acquired
the
interest
as
an
investment
expecting
that
the
property
would
be
held
for
ten
to
twelve
years.
From
1958
to
1965
the
farm
remained
in
the
hands
of
Mr
Cox,
the
former
owner,
rent
free
and
was
still
being
farmed
by
him
up
to
November
1,
1965,
when
the
property
was
sold
to
Carma
Developers
for
$416,000
payable
over
seven
years.
However,
no
effort
had
been
made
to
sell
the
property.
The
unsolicited
offer
received
from
Carma
Developers
was
followed
by
a
meeting
of
the
participants
and
accepted
unanimously.
In
my
view
the
appellant,
acting
in
association
with
others,
acquired
the
subject
property
with
a
view
to
price
appreciation
only.
The
land
was
not
purchased
for
use
or
development,
but
acquired
and
held
as
an
article
of
commerce
for
speculative
reasons.
Price
appreciation
was
the
primary
motivation
behind
the
transaction.
It
is
highly
unlikely
that
an
“investor”
would
pay
$83,400
for
a
parcel
of
property
with
a
nil
return.
The
fact
that
the
purchasers
made
an
arrangement
with
the
former
owner
whereby
he
was
permitted
to
remain
in
possession
on
a
no-rent
basis,
provided
he
paid
the
taxes,
marks
the
transaction
as
being
a
speculative
venture.
Price,
location
and
association
with
others
without
even
a
trace
of
periodic
return
or
susceptibility
to
the
income-earning
process,
clearly
indicates
that
the
appellant
only
had
in
mind
resale
at
a
higher
price.
Appeal
dismissed.
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