Bidart Bros., a Corporation v. United States

This is an appeal from a decision rendered against the taxpayer on his cause of action seeking a refund for income taxes paid under protest. 28 U.S.C. § 1346 (a) (1); Int. Rev. Code of 1954, §, 7422, 26 U.S.C. § 7422 . It covers the period May 1, 1951, to April 30, 1952. Appellant sold growing crops on leased land. The land had been leased for more than six months. Plaintiff sold the growing crops and the lease to the same party in one transaction and returned the profit as long term capital gain. The Commissioner accepted the taxpayer’s return showing capital gain on the sale of the farm leases; accepted the taxpayer’s return listing as ordinary income the proceeds of the sale of harvested crops on the leased land, but refused to accept the taxpayer’s treatment of the proceeds of unharvested crops on leased land as capital gain. The Commissioner determined the deficiency; the taxpayer paid it; claimed a refund; and, when the claim was rejected, filed this action below.

Section 117(j) (3) of the Int.Rev.Code of 1939 provides:

The word “land” above is emphasized because of its interpretation by the Government under Treasury Regulations 111, promulgated under the Int.Rev.Code of…