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.