Now Therefore, in consideration of the premises, and in further consideration of one dollar, in hand paid each to the other, the receipt whereof is hereby acknowledged, the parties hereto1962 U.S. Tax Ct. LEXIS 193">*200 agree as follows:

1. The parties of the first part agree to;

(a) Furnish the land hereinabove described, free of all incumbrances at the agreed value of Twenty-Eight Thousand ($ 28,000.00) Dollars as their share of the development.

2. The parties of the second part agree to;

(a) Make surveys, sub-divide, plat and record said sub-division for the agreed sum of Eight Hundred and Forty ($ 840.00) Dollars.

(b) To furnish all storm drain pipe, and other incidental items of materials at invoice cost (plus freight and taxes, at actual cost).

(c) Furnish and construct all 4" concrete aprons for spillways at dam for the price of 33 cents per square foot.

37 T.C. 932">*935 (d) To furnish the following pieces of construction equipment at the rental rates as shown below (each rental price to include operator & fuel):

(e) To furnish all construction labor (other than equipment operators) to clear and grub, laying of pipes and other incidental items required in the development, at the following price:

1962 U.S. Tax Ct. LEXIS 193">*201 Total of A, B, C, D and E in this paragraph shall not exceed $ 12,000.00, unless hereafter amended in writing between the parties hereto; and the work done shall be as directed by the parties of the first part. It is further agreed that parties of the second part will furnish to the parties of the first part a statement of accrued costs of development each 30 days during the continuance of said work; and work may be terminated by parties of the first part at their discretion, and the value of all work assessed as of that date.

3. At the completion of said development or at the termination of work as hereinabove set forth, the total amount due the parties of the second part is to be added to the $ 28,000.00 contribution of the parties of the first part; and from this combined sum the true equity of each is to be ascertained. When said equities are established, the parties hereto will jointly inspect and establish a wholesale value for each and every lot in said sub-division; said values, in their aggregate, to equal the combined total of the $ 28,000.00 due the parties of the first part and the amount due the parties of the second part under this agreement.

4. When said values are1962 U.S. Tax Ct. LEXIS 193">*202 established and lots numbered, the number and value of each lot will be placed on a separate slip of paper, and all of the slips of paper placed in a container in the presence of each of the parties hereto and a party selected by the parties hereto. The parties of the second part will then and there, in the presence of the others, draw from the container a sufficient number of lots (of an aggregate value) equal to the amount due the parties of the second part under this agreement; and the parties of the first part will forthwith execute and deliver a warranty deed to said drawn lots, to the parties of the second part. It being the intention of this agreement to establish a method whereby work done by the parties of the second part can be paid for with a portion of the developed property. [Emphasis supplied.]

On May 31, 1955, paragraph 2 of the contract was amended by providing that the cost of the work done by McDonald-Hooper would not exceed $ 14,000.

Pursuant to the contract as amended, the work of subdividing, platting, surveying, grading, draining, developing, and improving the property was done by McDonald-Hooper. The work was completed on January 13, 1956. Upon completion1962 U.S. Tax Ct. LEXIS 193">*203 of the work, the value of the work done by McDonald-Hooper was determined to be $ 14,000. Pursuant to the provisions of the contract, the lots as subdivided were then valued. After the valuation of each of the lots in accordance with the total aggregate value, 40 lots were set aside for and conveyed 37 T.C. 932">*936 to McDonald-Hooper and 80 lots were retained by Inez. Of the remaining lots, one was sold in 1956 and two were sold in 1957. The proceeds of such sales were reported as ordinary income in the returns filed for such years.

Inez did not have a real estate license. At all times pertinent to the issue under consideration John was a licensed real estate dealer and handled the sales of all parcels of real estate sold by Inez.

In the notice of deficiency respondent made the following determination regarding the transaction with McDonald-Hooper:

It is determined that you realized ordinary income in the amount of $ 9,333.33 from the transaction whereby you exchanged lots in Lake Forest Subdivision for improvements made to lots in said subdivision which were retained by you, computed as follows:

1962 U.S. Tax Ct. LEXIS 193">*204 Accordingly, your taxable income is increased in the amount of $ 9,333.33 for the taxable year ended December 31, 1956. Sections 61, 1221 and 1011 of the Internal Revenue Code of 1954.

In their Federal income tax return for 1956, petitioners treated the transaction as a sale or exchange of a capital asset held for more than 6 months and reported the gain as capital gain. The following business schedule from petitioners' 1956 return indicates their treatment of other items of income and expense:

1962 U.S. Tax Ct. LEXIS 193">*205 37 T.C. 932">*937 Issue 1.

Petitioners conveyed 40 lots in the Lake Forest Subdivision to McDonald-Hooper for work done on the subdivision. The issue to be decided is whether petitioners realized a taxable gain.

Petitioners contend that the transaction with McDonald-Hooper was merely an addition to capital and a nontaxable event. We see no merit in this contention.

Section 1001(a) of the 1954 Code ¹ provides that the gain from "the sale or other disposition of property shall be the excess of the amount realized therefrom over the adjusted basis provided in section 1011." Section 1001(b) provides that "The amount realized" is the sum of "any money received plus the fair market value of the property (other than money) received." Literally, where there is a disposition of real estate for services, ² no property or money is received by the one disposing of the real estate. However, in similar circumstances, it has been held that "money's worth" is received and that such receipt comes within section 1001(b). International F. Corp. v. Commissioner, 135 F.2d 310 (C.A. 2, 1943), affirming 45 B.T.A. 716">45 B.T.A. 716 (1941); United States v. General Shoe Corporation, 282 F.2d 91962 U.S. Tax Ct. LEXIS 193">*206 (C.A. 6, 1960), certiorari denied 365 U.S. 843">365 U.S. 843 (1961). Since the petitioners received a quid pro quo, the transaction resulted in a closed transaction with a consequent realized gain. By virtue of section 1002, ³ the entire amount of the gain is to be recognized.

37 T.C. 932">*938 Issue 2.

Having decided that petitioners realized a taxable gain, the remaining issue is whether it was ordinary income or capital gain. The answer to this question is dependent1962 U.S. Tax Ct. LEXIS 193">*207 upon whether the lots conveyed to McDonald-Hooper were held primarily for sale to customers in the ordinary course of petitioners' trade or business or for investment. If the lots were held primarily for sale to customers, then section 1221(1) of the 1954 Code ⁴ would exclude the lots from the classification of capital assets and the gain would be ordinary income rather than capital gain.

The issue is one of fact, D. L. Phillips, 24 T.C. 435">24 T.C. 435 (1955), and there is no one determinative test. The1962 U.S. Tax Ct. LEXIS 193">*208 many cases that turn on this issue have set forth certain factors to be considered. C. E. Mauldin, 16 T.C. 698">16 T.C. 698 (1951), affd. 195 F.2d 714 (C.A. 10, 1952). Some of these factors are the taxpayer's purpose in acquiring, holding, and disposing of the property, the activities of the taxpayer, or those acting either with him or on his behalf with respect to the improvement and actual disposition of the property, the frequency and continuity of sales, and the extent of advertising to promote sales or lack of such. But each case rests on its own facts and in most instances it is unlikely that all factors will be applicable or of the same weight that they might have in another factual background. See 16 T.C. 698">C. E. Mauldin, supra;Gamble v. Commissioner, 242 F.2d 586 (C.A. 5, 1957), affirming a Memorandum Opinion of this Court; Consolidated Naval Stores Company v. Fahs, 227 F.2d 923 (C.A. 5, 1955). While the purpose for the acquisition must be given consideration, intent is subject to change, and the determining factor is the purpose for1962 U.S. Tax Ct. LEXIS 193">*209 which the property is held at the time of sale or exchange. Carl Marks & Co., 12 T.C. 1196">12 T.C. 1196 (1949); Richards v. Commissioner, infra; 16 T.C. 698">Mauldin v. Commissioner, supra; Raymond Bauschard, 31 T.C. 910">31 T.C. 910 (1959), affd. 279 F.2d 115 (C.A. 6, 1960); Eline Realty Co., 35 T.C. 1">35 T.C. 1 (1960).

Petitioners have pointed out that the Knox Farm was owned by Inez and that the sales were always handled by her husband, John. They argue that since she was not conducting any business, the property could not be held primarily for sale to customers in the ordinary course of her trade or business.

There is no merit in petitioners' contention. It is an accepted principle of law that one may conduct a business through agents, 37 T.C. 932">*939 and, although others may bear the burdens of management, the business is nonetheless his. Walter H. Kaltreider, 28 T.C. 121">28 T.C. 121 (1957), affd. 255 F.2d 833 (C.A. 3, 1958); Achong v. Commissioner, 246 F.2d 445 (C.A. 9, 1957), affirming a Memorandum Opinion of this1962 U.S. Tax Ct. LEXIS 193">*210 Court; Fackler v. Commissioner, 133 F.2d 509 (C.A. 6, 1943); Snell v. Commissioner, 97 F.2d 891 (C.A. 5, 1938); Richards v. Commissioner, 81 F.2d 369 (C.A. 9, 1936). There is no doubt that John was handling Inez' property as her agent; therefore, any activity engaged in by John, relating to her property, can be imputed to her.

Petitioners have suggested that they were merely liquidating the Knox Farm. It is true that one may liquidate an asset in the most advantageous way and still obtain capital gains treatment. Galena Oaks Corporation v. Scofield, 218 F.2d 217, 220 (C.A. 5, 1954). However, petitioners have failed to show that this was what they were doing. Even assuming they had, a taxpayer is no less in the real estate business simply because his objective is to liquidate property than he would be if his objectives were something else, if his activities with respect to the property amount to the conduct of the real estate business. Frieda E. J. Farley, 7 T.C. 198">7 T.C. 198 (1946); Achong v. Commissioner, supra.1962 U.S. Tax Ct. LEXIS 193">*211

In 1956, the year before us, more than 50 percent of petitioners' income was derived from sales of Inez' property. In their Federal income tax return for 1956, petitioners' business schedule was headed:

JOHN D. & INEZ P. RILEY

ANDALUSIA, ALA.

REAL ESTATE, AGENCY

"SALES OF LOTS IN DEVELOPED REAL ESTATE SUBDIVISIONS"

It is settled that statements of this nature (self-description of business or occupation) constitute evidence of a taxpayer's business. Kaltreider v. Commissioner, 255 F.2d 833 (C.A. 3, 1958), affirming 28 T.C. 121">28 T.C. 121 (1957); White v. Commissioner, 172 F.2d 629 (C.A. 5, 1949); Pacific Homes v. United States, 230 F.2d 755 (C.A. 9, 1956).

There were sales in every year from 1944 through 1957. In addition to subdividing and selling lots out of the Knox Farm, there was similar activity in connection with two other subdivisions (Valley of Shilo and John D. Riley Subdivisions) owned by Inez. Just how, when, and under what circumstances these latter two subdivisions were acquired is not shown by the present record. We do know that in 1956, 1962 U.S. Tax Ct. LEXIS 193">*212 four lots in the John D. Riley Subdivision and 15 lots in Valley of Shilo Subdivision were sold. The extent to which any of this property was advertised or promoted is unknown, but this must weigh against the petitioners since the burden of proof is on 37 T.C. 932">*940 them. On the basis of the record before us, we are satisfied that petitioners were carrying on a real estate business.

Petitioners contend that even if they were real estate dealers, this does not mean that the transaction under consideration must necessarily be treated as a sale to customers in the ordinary course of business. They contend that they may occupy a dual role; that of dealers and investors. We agree with petitioners' contention as a statement of what the law is. However, the burden of proof is upon the petitioners to show that the property was held for investment.

Petitioners' main argument is set forth in the following excerpt from their brief:

we are concerned with the conveyance by Petitioners of a portion of the swamp lands and old abandoned mill pond, intended for sale as a subdivision (in connection with the general liquidation of the investment in "Knox Farm"), but which was "not marketable1962 U.S. Tax Ct. LEXIS 193">*213 as a subdivision in its then condition". The transaction between Petitioners and the Contractors and Engineers was for the very purpose of making the property involved in the transaction marketable as a subdivision. We are still at a loss to understand the Commissioner's idea that property which is not marketable in its then condition, conveyed to Contractors and Engineers in connection with arrangements and work to make it marketable, constitutes a sale or exchange of property "held primarily for sale to customers in the ordinary course of business". * * * [Emphasis in original.]

We see no merit in petitioners' position. Petitioners seem to be laboring under the misapprehension that marketability "in its then condition" is a touchstone for decision. They have apparently confused their case with cases such as 35 T.C. 1">Eline Realty Co., supra, ⁵1962 U.S. Tax Ct. LEXIS 193">*215 and Charles E. Mieg, 32 T.C. 1314">32 T.C. 1314 (1959). ⁶ Those cases involved unusual pieces of property that were not capable of subdivision or development and had, possibly, a single potential purchaser. In the instant case, petitioners' only problem was one of having work1962 U.S. Tax Ct. LEXIS 193">*214 done so the property could then be sold in accordance with their desires. Furthermore, the Lake Forest Subdivision property was admittedly intended for sale. McDonald-Hooper improved and subdivided the property so 37 T.C. 932">*941 that it could be sold in lots. The conveyance took place after the work was done and at a time when, even under petitioners' theory, the property was marketable and salable.

It is also to be noted that in 1956 other sales from the Lake Forest Subdivision were treated as sales from developed real estate subdivisions. The gain from these sales was reported as ordinary income. Although it is stipulated that petitioners1962 U.S. Tax Ct. LEXIS 193">*216 do not necessarily agree with this treatment, no satisfactory explanation for this treatment has been given.

A simple illustration discloses the fallacy inherent in petitioners' theory. A brick manufacturer, owning its own clay deposits, pays its workers in bricks rather than cash. Under petitioners' theory, this would be either a contribution to capital or the gain would be capital gain on the basis that the clay was not marketable as bricks and the bricks were not sold to customers. Obviously, this is not the law.

Merely by showing that additional work was required before the property in question could be sold as a subdivision or that it was exchanged rather than sold fails to satisfy petitioners' burden of proving the property was held for investment. Accordingly,

Decision will be entered under Rule 50.