Richard L. Matz and Linda A. Matz, Deceased, Richard Lee Matz, Jr., Independent Executor - Page 11

                                                - 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