Greene-Haldeman

This is a petition for review of a decision by the Tax Court, which upheld a determination of deficiency made by the Commissioner [Greene-Haldeman v. Commissioner, 1959, 31 T.C. 134 ] involving Greene-Haldeman’s (i. e. “taxpayer’s”) fiscal years 1949 through 1952. Jurisdiction is vested in this Court by virtue of the provisions of Section 7482 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 7482 .

For purposes of this opinion the pertinent facts may be summarized as follows:

Taxpayer is a California corporation with its principal place of business in Los Angeles, California. During the period here involved, it was a large Chrysler-Plymouth automobile agency. It engaged in the usual dealer’s enterprises, including the sale of new and used cars, parts and services, as well as automobile finance and insurance services.

In addition, the taxpayer also rented some cars for various periods prior to their sale as used cars; these rentals were of both a short-term and long-term variety (i. e., by short-term rentals we mean rentals by the day, week, etc.; by long-term rentals we mean leases for a period of one or two years). The taxpayer entered the short-term rental business prior…