- 11 -
There is no dispute that petitioner was actively involved in
a trade or business as a real estate broker. Petitioner has
worked as a real estate broker since approximately 1960. It is
possible for a taxpayer to be a real estate broker and operate a
second business involving buying and selling real estate for his
own account. See Tomlinson v. Dwelle, 318 F.2d 60, 61-62 (5th
Cir. 1963). For the reasons discussed below, we find that
petitioner was not engaged in a second trade or business of
acquiring, developing, and selling real estate for profit.
The Court of Appeals for the Fifth Circuit, to which this
case is appealable, "has developed a framework to be used in
determining whether sales of land are considered sales of a
capital asset or sales of property held primarily for sale to
customers in the ordinary course of a taxpayer's business."
Bramblett v. Commissioner, 960 F.2d 526, 530 (5th Cir. 1992),
revg. T.C. Memo. 1990-296; Suburban Realty Co. v. United States,
615 F.2d 171 (5th Cir. 1980); Biedenharn Realty Co. v. United
States, 526 F.2d 409 (5th Cir. 1976); United States v. Winthrop,
417 F.2d 905 (5th Cir. 1969). The Court of Appeals has directed
that three principal questions must be considered:
(1) Was the taxpayer engaged in a trade or business,
and if so, what business?
(2) Was the taxpayer holding the property primarily for
sale in that business?
(3) Were the sales contemplated by the taxpayer
"ordinary" in the course of that business? [Bramblett
v. Commissioner, supra at 530.]
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011