Facts
The appellant inherited a property in 1939, on which he operated a bakery and confectionery as well as a restaurant. On March 1, 1955, he leased the bakery and confectionery to his son and abandoned this business line. He continued to operate the restaurant as a tenant. On November 1, 1956, he sold the property. The tax authority taxed the resulting capital gain pursuant to Art. 21 para. 1 lit. d of the Defense Tax Decree (WStB) as income. The appellant contested this taxation.
Considerations
The Federal Court dismissed the appeal. It stated that Art. 21 para. 1 lit. d WStB covers all capital gains realized through the realization of business assets in the operation of a bookkeeping-obligated enterprise. Even though the appellant was no longer bookkeeping-obligated after leasing the bakery and confectionery, he initially retained the property invested in the previous business and continued to use it for the maintained restaurant business. It was only upon the subsequent sale of the property that he realized the increase in value that had accrued in this business asset, which is therefore subject to defense tax on income pursuant to Art. 21 para. 1 lit. d WStB.
The Federal Court further stated that the entire property, including the two apartments, is to be considered business assets of the bookkeeping-obligated enterprise. For the calculation of the taxable capital gain, the book value reported by the appellant in…