Ted did not attempt to sell …show more content…
Brodnax TC Memo 1970-164 (1970), Brodnax purchased half interest in 40 acres of land in 1962. Brodnax’s intent was to keep the property until it’s value increased due to the expectation that a highway would be built near the property. Brodnax and his partner ended up selling all but 10 to 12 acres of the land over a period of 3 years beginning in 1962. Several offers were made on the remaining section of the property, but Brodnax and his partner did not sell. The court found the initial intent of Brodnax purchasing the land and the fact that he refused to sell a portion a significant factor in favor of the capital gains treatment. In Ted’s case his intentions were similar to the Brodnax case. Ted wanted to hold the property until its value increased due to the ski resort becoming world class. Ted held his property longer than Brodnax held his property. These factors support Ted’s claim that the property should be considered an investment property.
Having a long holding time with the intention of the property appreciating does not always mean it will be considered an investment property. Est. of Clinton C. Millett, TC Memo 1964-159, 06/09/1964 was a similar case in which the property was held for 16 years. The major difference was, after 16 years of holding the property, Millett spent well over what he paid for the property to developed the lots. The court agreed that up to the point Millett developed the property it was a capital asset. Once he began developing the property it became an asset used in a