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HUFFORD v. UNITED STATES

November 29, 1965

Robert W. Hufford and Patricia G. Hufford, Plaintiffs,
v.
United States of America, Defendant


Powell, District Judge.


The opinion of the court was delivered by: POWELL

POWELL, District Judge.

 The decision of the Court was filed May 28, 1965, holding that the transaction involved in this case was not entitled to capital gains treatment. A Motion for Reconsideration has been made. I have determined to grant the motion to reconsider and to set aside the original decision.

 I am accepting, for the purposes of this opinion on reconsideration, the statements in the Government's trial brief (p. 3-4), which are as follows:

 
"The question of whether a particular transaction falls within the scope of a given taxpayer's trade or business * * * is a question of fact and is to be decided solely within the context of each case as it arises. Wineberg v. Commissioner, 326 F.2d 157, 160 (C.A. 9th). Both the Government and the taxpayer could cite numerous cases supporting their respective treatments of the barley here in question, but we believe that to do so would serve no useful purpose. * * * In general, four factors have been applied by the courts in determining the character of particular assets. * * * These are:
 
(1) The purpose for which the asset was acquired; i.e., for sale or for investment.
 
(2) The number, continuity, and frequency of sales by the taxpayer.
 
(3) The activity of the seller in promoting the sale.
 
(4) The extent of the substance of the transactions."

 Applying the four factors to the transaction herein involved I find that the transaction was of an isolated nature since I consider the sale of barley seed as being entirely different than the business ordinarily carried on by Mr. Hufford. It was not a transaction in which there was a purchase and sale of malting barley, which was his principal trade or business.

 The transaction was unusual. The receipts amounted to only a small percentage of his total sales, the seed was specially treated for the purpose for which it was intended and there has been no recurrence of the transaction.

 It has been held that a taxpayer in the business of buying and selling stocks could buy and hold stocks and receive capital gains treatment on them, that a taxpayer in the business of developing real estate subdivisions could hold real estate as a capital asset, and that dealers in commodities could do the same.

 I find here the circumstances do justify Mr. Hufford in treating the Haisa II barley seed as a capital gain transaction.

 The previous memorandum decision is vacated and the plaintiffs are directed to prepare and submit findings of fact, conclusions of law and judgment ...


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