*1 So.2d 488 Shirley LATTER, Widow of Dr. Lee SCHLESINGER, Individually and as C. Testamentary Executrix Succession Schlesinger, of Dr. Lee C. FONTENOT, Reve- Rufus W. Collector of nue, Louisiana. State

No. 43174.

April May 26,

Rehearing Denied *2 Himes, Roland, Robert L. A.

Levi Rouge, defendant-appellant. Baton Dennery, Schlesinger, petitioned Moise W. Den- Board of Tax McCloskey & Orleans, re- nery, plaintiff-appellee. Appeals assessment have said New there- upon a redetermination

viewed declared invalid. said assessment be SIMON, Justice. prior undisputably was shown that authority to and under Pursuant Lee 1951 Dr. during 1944 to dealing with revenue statutes of our actively practicing Schlesinger C. of Revenue Collector taxation1 Or- physician City of New residing a notice filed of Louisiana the State net leans. 1951 he sold at show- dated December assessment gain $190,765.18, gain was tax, pen- Louisiana income ing additional included income for taxable interest, total sum alty and year for the reason as contended & Dr. Lee C. $9,316.45 due property consti- the said for the calendar Shirley L. asset outside tuted located of which amount sum year said State of Louisiana and therefore the delinquent $8,031.42 shown exempt from Louisiana income $1,285.03 shown as amount tax due provisions tax under of LSA-R.S. *3 January The due to of interest 47:512. also notified the said of assessment notice hand, con the other On sixty calendar they had that question property in tended the in notice which days of the date the from capital of meaning asset within the not a or pay additional assessment this to either laws, in income tax and as defined our the Board of appeal with file an LSA-R.S. 47:72 3. or redetermination Appeals a review for Whereupon in time due Harry thereof. The record discloses that Mr. Latter, Dr. Lee C. widow of Shirley realtor, Latter, of the father-in-law seq. business, 47:1561 et 1. LSA-R.S. or with Ms trade ex- connected cept taxpayer from the sale 47:51: “Gains in trade LSA-R.S. stock of the or capital exchange property assets located out- of or of a kind which other properly would inventory Louisiana not be of shall State side the included in the be and be in shall if on hand at the included the close Chap- year, property exempt under this or from taxation taxable held the taxpayer the primarily sale customers ter.” ordinary from “Losses sales in course trade or 47:72: his busi- 3. LSA-R.S. exchanges ness, property, assets shall be or used in a trade or busi- or deduction, only ness, subject the character extent which is as allowed exchanges. pro- from such sales to the allowance the 47:65; ‘capital assets’ means all R.S. and land term vided used “The taxpayer.” taxpayer, property whether or not business the trade the immediately Schlesinger following advised him concern- the and sale in 1951 Dr. purchaser acquisition disposition of the the ing buildings demolished the Memphis, improvements property Tennessee. located located thereon and con- property origi- building structed occupying Mr. Latter testified that the a commercial parcels ground nally of three whole site. consisted Memphis; district of located The Collector of Revenue contends that improvements were one thereon purchase, purposes for rental use years of de- a state two hundred old profitable property and the dur- ; cay his and son- daughter that he advised ing the interim from 1946 to 1951 con- acquire respective properties in-law to pri- holding property stituted the of the per- price and to at the lowest obtainable marily ordinary for sale course of until the occupancy mit tenants to retain joint rent- business of properties could consolidated ing real tax- estate and hence single sold as a unit for commercial able. price poses highest market during The record also shows that purpose sole available. He testified Schlesinger from 1948 to 1951 Dr. on purchase to offer for sale consisting partnership was a member aof practicable the con- as market soon brother, Shep- himself, his wife and her unit and properties single aas solidated Latter, ard which owned commercial transaction. thus realize estate in New and elsewhere Orleans expert Dr. Schle- advice accord with Harry operated managed by which was agencies singer, acting through real estate Latter, However, realtor. the transaction purchase, management and subse- Memphis involving sale, parcel of the quent acquired the first sought here to be busi- taxed was the sole August 14, the second on ness venture of this nature and the third on December August partnership Dr. other than his paid agents 1946. Rentals affiliation. occupying buildings then the tenants *4 clearly by It is established monthly agreements until the record that under operation management part- last the time of the From sale. 1951 nership was in the exclusive parcels were consoli- hands when the chase Harry Latter, subsequent realtor. The did unit until the one into dated n any time, give engage made not or efforts were attention or continuous 1951 appears in connection therewith. It labor It is purchasers. true interest occupation, but it is employment, regular profits the they benefited whatever However, necessary his sole oc- not it should yielded partnership assets them. ” cupation employment.’ affiliation fairly said that their it cannot be as would partnership was such with this management of Whether being en- constitute their be sufficient to profit “engaging in business estate for is the buying, or business gaged in the trade trade”, Fed meaning or within realty. selling renting or ques a eral Revenue Act raises federal Tax Board of hearing before the After a tion, which controlled state cannot be in favor Appeals judgment was rendered In decisions. Pinchot v. Commissioner of against taxpayer and Revenue, Cir., Con ternal 113 F.2d 718. subject Revenue, ordering the assessment versely, management whether of real estate annulled. Thereafter aside and set or “engaging is the business appealed to the Civil Revenue Collector meaning trade” within the of a state statute the Parish of Orleans Court for District decisions. cannot be controlled federal judgment seeking a re- the said review a Courts can The decisions of Federal trial court affirmed thereof. The versal light guidance. as mediums for serve Board, and ruling of findings 'and appealed presents to us Collector universally fundamentally is presented, question heretofore the identical though acquired true that even is taxpayers herein were en- whether revenue, necessarily it does mean ordinary trade business of gaged engaged in the investor is a trade or busi realty so as to renting person A can be ness. in more subject trans- necessarily conclude trade, occupation profession. than one taxation. amenable to action may engage profit A some doctor other regular besides able business his accord with the defini are in We may profession; lawyer; a may so so Holmes, Federal Income expressed in tion employed general manager one who is 969, is Ed.) page at wherein it (6th business concern. and ‘business’ ‘trade’ “The terms said: ‘that which Higgins as follows: v. Commissioner of defined been Internal have 212, time, engages Revenue, attention 312 U.S. S.Ct. occupies and anyone purpose United Supreme 85 L.Ed. States labor that to improvement; Court held determine livelihood, profit, or whether the interest; of a personal “carrying concern or activities are his 47:1434, LSA-R.S. *5 requires embracing, of the but is not all and neither is the an examination business” taxpayers fact that claimed in case. the allowance facts each property. There is of In Commissioner Internal Fackler no evidence tax- herein that the show 509, 511, Cir., the Revenue, 6 133 F.2d payers engaged buying selling were and practice the engaged of petitioner estate, it, rents, real renovating collecting engaged in the to be also law and was held they activities which would indicate that operating building or business trade were in the trade or business of Tax Board of purposes the for rental buying, renovating, renting and United States Appeals (now the contrary, estate. the On the evidence the findings, Court). reaching these In primary shows that the intention of the attending facts considered, the from court taxpayers acquire parcels the primary intention circumstances, the property purpose of consolidating the acquiring the. leasehold taxpayer, the one unit and them into sold as soon thereon, en- was to renting the profit. as the market afforded While await- acquiring, gage in the or business opportune ing time the marketwise to sell court renting property. The managing occupancy the same tenants continued said: buildings at nominal rent. is shown personal operating that the manage- the evidence inference from “It a fair ment, including payment of taxes leasehold with petitioner acquired the rentals, charge collection operating primary intention negotiated who had realtors the sales to he was building upon it for taxpayers acquisition from merely in- an holding the properties until their col- We fail solely purpose of vestment any taxpayers to find evidence that rendering personal lecting rents without time, gave personal herein of their atten- ours.) (Italics tenants.” service venture, tion or labor in this or that the record shows the instant case holding profitable it for revenue received annual poses as a trade or business. real estate taxpayers individual from their Memphis property and surrounding Under the facts and

investment presented they were circumstances of which here we partnership are con to hold from Dr. strained manifest exceeded the income intention far members purpose practice. This is a and in acquiring Schlesinger’s medical subject properties weighed single was a considered in- to be circumstance correctly subject prop- determined that “engaging than rather vestment venture capital erty was a that therefore asset and implies an ele- in trade or business” under LSA-R.S. 47:51 the realized practice, reg- continuity ment or habitual sale of the said located in oc- asset employment and not occupation ular *6 another state is non-taxable. The rule acts. casional, disconnected isolated or crystallized to jurisprudence too well in our aft further discloses The record necessitate that where discussion or citation the merits er the case was tried on the issue fact a purely involved is one by judge, the trial decision submitted for fair anafytical disposition and sound there- rendered, tax judgment but before byof judge the trial warrants affirmance. payers motion dismiss filed a to Accordingly, for assigned, the reasons Civil District Court of ground that the judgment is affirmed. jurisdiction was without Parish of Orleans taxpayer that is domi for the reason McCALEB, J., with dissents written rea- Parish of whereas

ciled in the Jefferson sons. provides judg that a LSA-R.S. 47:1436 Appeals may the Board of Tax

ment of individuals, McCALEB, reviewed, (dissenting). the case of Justice for the district wherein district court It seems clear to me from the facts that taxpayer resident or district is a Dr. Schlesinger substantially engaged mutually agreed court selling and rental of real taxpayer. judge The trial cor and the business; estate as a trade or rep- that he exception rectly motion to be an held said resented in his income tax returns he jurisdiction personae and ratione to the that, was so accordingly, the judge The trial too late. further cor filed estopped herein is now from con- taxpayer’s failure rectly concluded that tending otherwise. appears This conclusion jurisdiction per except ratione inescapable from an examination of the litis was in limine an ac sonae tax returns filed Dr. Schlesinger forum, but ceptance was tantamount years 1947,-1948, 1950, jurisdic submit agreement to to an while he was owner properties lo- that court. tion of Memphis, cated in which reveal major part conclude We therefore that his income was derived from Appeals and real-estate District ventures in partnership Board with his brother, the sole issue herein wife and her resolved Court included in which 102 So.2d 755 the Bien- operation was the rental and ville Hotel in New Orleans. Richard A. DOWLING 1947,

During Dr. $10,160 from the gross received rental of ORLEANS PARISH DEMOCRATIC COM- MITTEE V. and Malcolm O’HARA. Memphis depre- properties claimed $5,500’; in amounting to ciation thereon No. 44006. $11,- 1948, gross received rental 20, March depreciation amounting to claimed Opinion April $13,182, $5,850.49; rental gross and, $5,850.49 and claimed $11,945 depreciation of

they claimed the same

$5,850.49. 9(L) of provisions Section

Under the amended, which was

Act made returns at the time

effect *7 Schlesingers, a deduction permissible depreciation was busi- trade or on used “in taxpayers, hav- Accordingly, the

ness”.1

ing received credit $20,000 during properties of well over represent- ownership, their their trade they were used assets

ing that permitted to business, now should not position and contend their

reverse taxable be- not their sale is

profit made on assets

cause

“ * * * in a trade land used taxpayer”. dissent. respectfully

I incorporated erty provision “in used business or 1. When production as R.S. held [that] of in Statutes Revised in the 47:65, provide that come.” was amended it prop depreciation is allowable