Brief Fact Summary. Petitioner bought a large tract of land for the cattle business. After deciding against the cattle business, he divided the land into tracts and aggressively sold the tracts. At one point he stopped aggressively selling and went full-time into the lumber industry.
Synopsis of Rule of Law. Profits received from the ordinary course of one’s trade or business should be treated and ordinary income and is not entitled to capital gains treatment.
While the purpose for which the property was acquired is of some weight the ultimate question is the purpose for which the property is held.View Full Point of Law
Issue. Was the property sold by Petitioner in the ordinary court of his trade or business?
Held. Circuit Judge Murrah issued the opinion for the United States Tenth Circuit Court of Appeals in affirming the lower courts and holding that the property was sold in the ordinary course of his trade or business and should be treated as ordinary income.
Discussion. The Court of Appeals notes that at all times Petitioner had lots for sale. Further, he continued to sell lots and his success depended upon the economic conditions. He also received a substantial amount of income from the sales even though he was also in the lumber business.