Jamieson Associates, Inc. v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 20 January 1938 |
| Docket Number | 77212,77213.,77018,Docket No. 75717,77019,76899 |
| Citation | 37 BTA 92 |
| Parties | JAMIESON ASSOCIATES, INC., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. ESTATE OF MARGARET WAINWRIGHT, JOHN W. WAINWRIGHT, EXECUTOR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. SEASIDE IMPROVEMENT COMPANY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. JOHN W. WAINWRIGHT, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. WAINWRIGHT AND SMITH COMPANY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. WAINWRIGHT, REMSEN AND TATOR CORPORATION, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Benjamin Mahler, Esq., for the petitioners.
J. R. Johnston, Esq., for the respondent.
The proceedings as originally instituted involved the following deficiencies in income tax for the year 1931.
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| Docket No. | Deficiency
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Jamieson Associates, Inc _________________________________________ | 75717 | $2,144.92
Estate of Margaret Wainwright, John W. Wainwright, Executor ______ | 76899 | 8,280.74
Seaside Improvement Co ___________________________________________ | 77018 | 14,991.92
John W. Wainwright _______________________________________________ | 77019 | 2,561.64
Wainwright and Smith Co __________________________________________ | 77212 | 2,314.62
Wainwright, Remsen & Tator Corporation ___________________________ | 77213 | 5,824.07
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The above stated deficiencies arise mainly from the determination by the respondent that the petitioners realized profits as a result of the condemnation by the city of New York of certain realty claimed to have been owned by them in Rockaway Beach, New York, and payment of the awards made therefor.
The above proceedings were consolidated for hearing and decision.
In Docket Nos. 75717, 76899, and 77018 leave was granted to the respondent at the hearing to file amended answers praying for increased deficiencies, and by such amended answers respondent asks increased deficiencies on the ground that the amounts of $46,001.47, $66,353.10, and $44,600, respectively, were erroneously deducted from awards made to the respective petitioners. The argument relied upon is that the properties as to which the awards were made did not belong to the respective petitioners, and that therefore awards received by them constituted gain in their entirety.
FINDINGS OF FACT.
Jamieson Associates, Inc., is a New York corporation, organized in October 1923. The Wainwright & Smith Co. is a New York Corporation, organized in 1908. The Wainwright, Remsen & Tator Corporation is a domestic corporation, organized in 1909. All three of said petitioners keep their books and render their returns on an accrual basis.
Petitioner, the estate of Margaret Wainwright, is represented by John W. Wainwright as executor. The Seaside Improvement Co. is a New York corporation. John W. Wainwright is an individual, residing at Seaside, Rockaway Beach, New York. The three last named petitioners keep their books and render their returns on a cash receipts and disbursements basis.
Petitioners Seaside Improvement Co., John W. Wainwright, Wainwright & Smith Co., and Wainwright, Remsen & Tator Corporation all owned Atlantic Ocean water front property upon Rockaway Beach, affected by the condemnation proceedings herein considered, and owned said property so affected from prior to March 1, 1913, to the date of condemnation, July 15, 1925. Petitioners, the estate of Margaret Wainwright and Jamieson Associates, Inc., acquired the water front properties involved in the year 1923; Jamieson Associates, Inc., in October 1923; and the estate of Margaret Wainwright on September 10, 1923, the date of her death.
Rockaway Beach is a long narrow peninsula, a part of Long Island, New York, about seven miles in length, with a width ranging from one-third of a mile to about one mile. It is bounded on the north by Jamaica Bay and on the south by the Atlantic Ocean. The Long Island Railway tracks and, south of the tracks, Rockaway Beach Boulevard, running east and west, intersect the streets, which run north and south, and which are numbered consecutively from east to west (as well as named in some instances).
The section at or about Beach 103d Street (also called Remsen Avenue or Seaside Avenue) is known as Seaside. The section about Beach 70th Street was known as Arverne. There was a boardwalk there, from Beach 56th Street to Beach 74th Street, on March 1, 1913. The section about Beach 84th Street was called Hammel. The section about Beach 92d Street was called Holland. The section about Beach 32d Street was called Edgemere. There were railroad stations at Seaside, Hammel, Holland, and Rockaway Park, the latter station being between Beach 115th and Beach 116th Streets. At the north end of Holland Avenue (Beach 92d Street) on Jamaica Bay, there was a landing called Holland's Landing, and that avenue corresponded in the Holland section with Seaside Avenue in the Seaside section. It was the main street of that section. A good many people got off the railway at Holland Avenue and walked along the boardwalk and did not come down Seaside Avenue.
From prior to 1907 a private street 30 feet in width, known variously as Ocean Avenue, Ocean Walk or Brick Walk, ran east and west from about Beach 101st Street to Beach 106th Street, ranging from about 250 to 400 feet north of the ocean, and about 350 or 400 feet south of Rockaway Beach Boulevard. In 1907 Ocean Avenue terminated with dead ends both at Beach 101st Street and Beach 106th Street.
Prior to 1907 other owners of water front property east of Beach 100th Street had constructed a private boardwalk running east and west parallel with the Atlantic Ocean and about 150 feet north thereof. This boardwalk covered a distance of approximately eight blocks, running from Beach 92d Street (Holland Avenue) to Beach 100th Street. In 1907 the Seaside Improvement Co. built an incline walk to connect Ocean Avenue and the private boardwalk.
On March 1, 1913, the high water line at Rockaway Beach, Seaside section, was about 300 feet farther south than it was in 1925.
On March 1, 1913, Rockaway Beach was reached usually in either of two ways — by the Long Island Railroad or Brooklyn Rapid Transit over the Long Island Railroad tracks, or by way of excursion steamers. Some people came by carriages and a few by automobiles. The majority of the people came by boat. There were various boat lines that came into several piers along the Jamaica Bay side. There were many excursion boats every day during the summer. The boats continued to run up to 1934.
The Seaside section was the only section in the whole shore front where amusement of every kind could be had. The best public bathhouses were there and the finest restaurant and theatres. There was no difficulty renting property on those streets. Both sides of Ocean Avenue were utilized for rentals of concessions.
The rentals received on Ocean Avenue and Incline Walk in 1913 were from $20 to $60 per front foot, for a space approximately 15 to 20 feet in depth. Property in that section fronting on the beach rented for about the same.
Seaside Avenue (Beach 103d Street) was the principal artery through the section involved in these proceedings and hereinafter discussed. The farther property lay (to the east) from Seaside Avenue, the less valuable it was. Property on Beach 106th Street and from there west had a lower value than property farther east.
Various unimproved lots 25 feet by 100 feet were sold by the Seaside Improvement Co. in 1913 for $2,500 each between Rockaway Beach Boulevard and the Long Island Railway tracks. Two lots of that size sold for $4,500. In 1914 the northwest corner of Rockaway Beach Boulevard and Beach 101st Street, 100 feet by 100 feet, sold for $16,000. In 1925 the northwest corner of the same boulevard and Beach 100th Street, 98 feet by 200 feet, sold for $70,000. The beach enjoyed only about twelve weeks of business per year, while around the Rockaway Beach Boulevard it was a year round business.
In 1917 the Brooklyn Rapid Transit discontinued running its trains over the Long Island Railroad tracks. Thereafter the only train service available was the Long Island Railroad, which ran only according to schedule. In 1918 daylight saving was adopted, which affected the business section of Rockaway Beach by keeping people in bathing longer. In 1919 prohibition came into existence, which also affected the Seaside section of Rockaway by cutting down the number of outings of various kinds that had come to Rockaway.
Subsequent to 1913 the use of the automobile as a mode of transportation increased. New automobile roads were built and existing streets were widened. The Cross Bay Boulevard entered Rockaway at Beach 95th Street and brought Rockaway seven miles nearer to Brooklyn and New York. Other public improvements and boulevards were erected. As a result of these developments, other parts of Rockaway developed. The development of the automobile and new streets and automobile roads distributed the business. The automobile brought more people to Rockaway. They were of a transient nature. It helped the business houses, concessions, and amusement devices. The more that transient people came in the better the business would be. A great many more people came to Rockaway in 1925 than in 1913. The crowds in 1925 were much larger than in 1913. Shortly prior to 1925, jetties were started. Business in the Seaside section up to 1925 was fair, about the same as...
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