Commissioner v. Berkeley Hall School, Inc.

The petitioner seeks reversal of a decision of the Board of Tax Appeals determining nontaxable certain income to respondent, a corporation organized to engage in teaching for profit. The claimed profit arose from a real estate purchase development subdivision and sale trust, in general form like many from Southern California which have received our consideration.

The trust provided for the purchase by the trustee from the seller of 72 acres of land in Beverly Hills, Los Angeles county, Cal., on which purchase there had been a down payment of $10,000. The balance was to be paid from the proceeds of sales under the trust. A trust company was trustee and the instrument provided for a manager of the enterprise who was to act under the direction of the beneficiary, the respondent corporation, which was to receive all of the profits. The enterprise was a success, largely because certain Christian Science parents and their friends purchased lots in the tract surrounding a parcel reserved for a school plant for the education of the children of persons believing in or friendly to the Christian Science doctrines. The profits of the subdivision transaction came into the possession of the…