Sunday, May 12, 2013

Mauldin v. Commissioner case brief

Mauldin v. Commissioner case brief
195 F.2d 714, 1952 U.S. App. 52-1 U.S. Tax Cas. (CCH) P9258; 41 A.F.T.R. (P-H) 1126

CASE SYNOPSIS: Petitioner taxpayers appealed the decision of the Tax Court, which held that the profits realized from the sale of certain lots sold by taxpayers constituted ordinary income taxable under I.R.C. § 22(a) and not a capital gain taxable under I.R.C. § 117(a)(1).

FACTS: The taxpayers purchased land in order to operate a cattle business. The business was never established, so the taxpayers divided the land into tracts for sale as residential properties. The taxpayers filed income tax returns for several years that identified the profits from the sales as long-time capital assets. The commissioner contended that the profit realized was taxable as ordinary income, so he assessed the taxpayers accordingly. The taxpayers initiated an action against the commissioner and the tax court found that the profits were taxable as ordinary income. On appeal, the court affirmed the decision. The property was sold in the taxpayers' ordinary course of business, so it was taxable as ordinary income. Even though the taxpayers purchased the land to operate a cattle business, the taxpayers engaged in the vocation of selling lots of the land. While the purpose for which the property was acquired was of some weight, the ultimate question was the purpose for which the land was held.

CONCLUSION: The court affirmed the lower court's decision, which held that the profits were taxable as ordinary income rather than long-time capital assets.

Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?

No comments:

Post a Comment

The Evolution of Legal Marketing: From Billboards to Digital Leads Over the last couple of decades, the face of legal marketing has changed a l...