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the assignment of the sales contracts to CNB and a mortgage on
the Jackson Creek property.
OPINION
This case presents the purely factual question of whether
gain from the sale of real property resulted in ordinary or
capital gain income. Petitioner, his brother, and Oldach
acquired real property that was intended for residential
development. Petitioner and the others generally earned their
income from and were involved in commercial real estate
development. The property in question was held by a passthrough
entity which had no purpose and engaged in no significant
activity other than to hold the acquired realty for appreciation
and sale. Respondent, because of petitioner's involvement in
commercial real property development, questioned whether gain
from the sale of the property should be reported as capital gain
or ordinary income. After considering all of the evidence, we
find as an ultimate fact and hold that the gain was capital in
nature.
JCLC, a limited liability company formed under the State
laws of Colorado, filed a U.S. Partnership Return of Income for
Federal income tax purposes. See sec. 301.7701-2(b), Proced. &
Admin. Regs. Petitioner’s distributive share of income from JCLC
is of the same character as that realized by JCLC upon the sale
of the Jackson Creek parcels. See sec. 702(b). In order to
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