Appeal from the Order of the Court of Common Pleas of Philadelphia County in case of Irvin G. Schorsch, Jr. and John B. Schorsch v. Tax Review Board, No. 171 April Term, 1977.
Merle A. Wolfson, with him Krekstein, Shapiro, Bressler & Wolfson, for appellant.
Augustus L. Pasquarella, Assistant City Solicitor, with him Sheldon L. Albert, City Solicitor and Stewart M. Weintraub, Deputy City Solicitor, for appellee.
Judges Rogers, Blatt and Craig, sitting as a panel of three. Opinion by Judge Blatt. Judge DiSalle did not participate in the decision in this case.
[ 49 Pa. Commw. Page 226]
The subject of this appeal from the Court of Common Pleas of Philadelphia County is the taxability of Irvin C. Schorsch, Jr. and John B. Schorsch (appellants) under the Philadelphia Net Profits Tax Ordinance, The Philadelphia Code § 19-1500 et seq., and the Philadelphia Mercantile License Tax Ordinance, The Philadelphia Code § 19-1000 et seq. The court below sustained the Philadelphia Tax Review Board in finding appellants subject to the payment of both taxes, and the sole issue here is whether or not the appellants were engaged in a business, within the meaning of The Philadelphia Code and cases interpreting it, so as to make them taxable for the years 1970 to 1975 under the tax ordinances concerned.*fn1
The facts are not in dispute. Prior to 1968 the appellants were the sole shareholders of a corporation known as the Metal Bank of America, Inc., which conducted a smelting and refining business at its various properties in Philadelphia. In 1968, its assets were sold to the Union Corporation except for its real property. Metal Bank of America, Inc., thereafter changed
[ 49 Pa. Commw. Page 227]
its name to L. Goldstein's Sons, Inc., in which the appellants remained the sole shareholders, and, because the Union Corporation had not purchased the real property, L. Goldstein's Sons, Inc., leased the major portion of it to the Union Corporation and most of the remaining property to various other lessees. L. Goldstein's Sons, Inc., was then dissolved and its assets distributed to its shareholders, the appellants, so that they became the unincorporated co-owners of the properties. Pursuant to the distribution of the assets of the dissolved corporation, they also became the lessors of the properties. During the years in question, the combined rental income for the properties was approximately $130,000 per year.
The determination of a business activity for purposes of taxability under Sections 19-1500 and 19-1000 of The Philadelphia Code is governed here by the Superior Court's decision in Philadelphia Tax Reveiew Board v. Weiner, 211 Pa. Superior Ct. 229, 235 A.2d 184 (1967), where the Court held that the crucial elements of a rental business under The Philadelphia Code are (1) the deliberate acquisition of property for the purpose of conducting a rental business and, (2) the provision of any services with regard to the property. The Court in Weiner, supra, stated in part:
The conclusion would then be that any quantum of such action, such as deliberate acquisition and the provision of even minimal services, would qualify the activity in question as a business activity and merit the imposition of the tax.
211 Pa. Superior Ct. at 238, 235 A.2d at 188.
The appellants here fulfill the requirement of having deliberately acquired the property to carry on a rental business. As the sole shareholders of L. Goldstein's Sons, Inc., they approved the corporation's ...