Daugherty v. Commissioner
United States Tax Court
Ps, who operated a proprietorship engaged in the sale of real estate to customers in the ordinary course of their business, purchased in 1968 for $ 11,000 certain acres of unimproved waterfront land adjacent to Janes Island State Park in Maryland. From 1968 through 1972 they platted, subdivided, and preliminarily developed the property. In 1973, Ps received notice from the State of Maryland that it was interested in acquiring the property by condemnation.
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Ps, who operated a proprietorship engaged in the sale of real estate to customers in the ordinary course of their business, purchased in 1968 for $ 11,000 certain acres of unimproved waterfront land adjacent to Janes Island State Park in Maryland. From 1968 through 1972 they platted, subdivided, and preliminarily developed the property. In 1973, Ps received notice from the State of Maryland that it was interested in acquiring the property by condemnation. In 1974, condemnation proceedings were begun, which culminated in April 1975 in a settlement whereby Ps received $ 165,000. On their 1976…
1Opinion of the Court
Dawson, Judge:
Respondent determined the following deficiency in and additions to petitioners’ Federal income taxes:
Addition to tax
Year Deficiency sec. 6653(a)1
1975 .$42,940.64 None
1976 . None $147.64
1977 . None 109.86
The principal issue is whether the gain received by petitioners in 1975 from the State of Maryland incident to the condemnation of land owned by them adjacent to Janes Island State Park is taxable as ordinary income or as capital gain. The resolution of this issue depends upon whether the petitioners were holding the property for sale to customers in the ordinary course of their…
2Cases cited43 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Corn Products Refining Co. v. CommissionerSupreme Court of the United States · 1956
- Lyeth v. HoeySupreme Court of the United States · 1938
- Commissioner v. P. G. Lake, Inc.Supreme Court of the United States · 1958
- Malat v. RiddellSupreme Court of the United States · 1966
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3Cited by38 opinions
- Andrew Crispo Gallery, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1994
- Cottle v. CommissionerUnited States Tax Court · 1987
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- Guardian Indus. Corp. v. CommissionerUnited States Tax Court · 1991
- Andrew Crispo Gallery v. CommissionerUnited States Tax Court · 1992
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