318 F.2d 60 | 5th Cir. | 1963
Lead Opinion
This is an appeal from a judgment of the District Court for the Southern District of Florida allowing the appellees-taxpayers
Taxpayer for over twenty-five years has been a licensed realtor in Jacksonville engaged generally in real estate brokerage and management activity for the account of others. He has operated as a sole proprietorship, maintaining an office and staff of clerical, sales and maintenance employees, has enjoyed continuing success and has obtained recognition in state and national real estate organizations. Property management was a prominent aspect of his business and during the years 1954 and 1955 he charged a fee of five per cent of gross rentals for his services in such regard.
In addition to rendering professional services a,s a realtor to others, taxpayer bought, operated and sold rental properties for his own account. Separate books were kept of these transactions and an “excess management commission” of ten per cent was paid by taxpayer to his realty firm for servicing operations which contemplated and included the selling of the properties. The amounts
Taxpayer testified that he purchased each property for the purpose of investment and that sale of each property was made when in his opinion the investment became undesirable for his intended purpose. He indicated such generalities as deterioration of neighborhood, changing traffic patterns, zone changes, and original error in purchase as motivating sales. And although subjective intent honestly expressed is, of course, an important factor in determining the impact of tax statutes still reference to varying objective tests and standards, as this Court has often stated,
In the case at bar we can see very little in the activities of taxpayer that differs from that “ordinarily associated with real estate dealers.” Goldberg v. C. I. R., 5 Cir., 223 F.2d 709. Purchases and sales were frequent and continuous; sales were immediately anticipated upon purchase as indicated by the payment of excess management fees; sales, with few exceptions, were accomplished by newspaper advertising of the properties in the taxpayer’s realty business ads and by the placing of “for sale” signs on the premises; sales were seldom made for cash and trades were solicited and obtained; financing was offered by and carried by taxpayer; income from sales supplied funds for additional purchases; and income from sales, at least during the taxable years of 1954 and 1955, exceeded that of rents. Although no single factor is conclusive, all are indicative, and when faced with the construction that must be accorded the capital gain provision of the Internal Revenue Act
The judgment of the trial court is
Reversed.
. Appellees will hereinafter be termed in the singular with reference to the principal taxpayer, Edward Dwelle, Jr.
. Lobello v. Dunlap, 210 F.2d 465, 468; Gamble v. C. I. R., 242 F.2d 586, 590; Barrios’ Estate v. C. I. R., 265 F.2d 517.
. Corn Products Refining Co. v. Comm., 350 U.S. 46, 52, 76 S.Ct. 20, 100 L.Ed. 29 ; Commissioner v. P. G. Lake, Inc., 856 U.S. 260, 265, 78 S.Ct. 691, 2 L.Ed.2d 743.
Dissenting Opinion
(dissenting).
If I had been the trier of the facts, I think I would have decided the issue in this case for the Government. But I do not think it has been shown that the district court applied improper standards or that the inferences which it drew were clearly erroneous. Therefore I dissent.