Los Angeles Extension Company v. United States, 17991

Citation315 F.2d 1
Decision Date19 March 1963
Docket Number17992.,No. 17991,17991
PartiesLOS ANGELES EXTENSION COMPANY, Appellant, v. UNITED STATES of America, Appellee. SECURITY FIRST NATIONAL BANK, Appellant, v. UNITED STATES of America, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Mackay, McGregor & Bennion, A. Calder Mackay, Adam Y. Bennion, and Robert M. L. Baker, Los Angeles, Cal., for appellants.

Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Alan D. Pekelner and Michael I. Smith, Attys., Dept. of Justice, Washington, D. C., Francis C. Whelan, U. S. Atty., Walter S. Weiss, Asst. U. S. Atty., and Loyal E. Keir, Asst. U. S. Atty., Los Angeles, Cal., for appellee.

Before JERTBERG and BROWNING, Circuit Judges, and FOLEY, Jr., District Judge.

JERTBERG, Circuit Judge.

The basic issue presented on these appeals is whether gains realized by appellant, Los Angeles Extension Company, hereafter taxpayer, from sales in 1953 of four parcels of real property are taxable as ordinary income or as long-term capital gains.

In its federal income tax return for 1953, taxpayer reported such gains as having been realized from the sale of capital assets taxable as long-term capital gains, and paid the tax shown on such returns. Upon audit, the Internal Revenue Service determined that the four parcels of real property were not capital assets and that the gains realized from such sales were taxable as ordinary income. The resulting deficiency in tax plus interest thereon was paid. Complaints were filed in the District Court to recover the amount of tax allegedly erroneously overpaid. One complaint is on behalf of the taxpayer, and the other on behalf of appellant, Security First National Bank, hereinafter bank, which paid a portion of the taxes in controversy as a transferee of assets of taxpayer.

The two cases were consolidated for trial in the District Court. Under the pretrial order signed by the District Court the only issue of fact presented to the District Court for decision was whether the four parcels of real property were held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business or held primarily for investment purposes.

Following trial, the District Court made and entered extensive findings of fact specifically finding that each of the four parcels of real property was held by the taxpayer primarily for sale to customers in the ordinary course of the trade or business of the taxpayer and that none of said parcels was held by the taxpayer primarily for investment purposes.

The District Court concluded that the taxpayer failed to sustain its burden of proof that the parcels of real property were not held by the taxpayer primarily for sale to its customers in the ordinary course of its trade or business, failed to sustain its burden of proof that said properties were capital assets within the meaning of Section 117(a) (1) (A) of the Internal Revenue Code of 1939, as amended, and that said properties were not capital assets within the meaning of the above stated section of the Internal Revenue Code.

The District Court adjudged that the appellants take nothing by reason of their complaints and dismissed the same with prejudice.

Separate appeals were taken but are presented on a consolidated record. A determination with respect to the appeal of the taxpayer will be determinative of the appeal of the bank.

Taxpayer's sole contention on this appeal is that the finding of fact of the District Court is clearly erroneous. Confronted by such contention it is the duty of this court to examine the entire record since we are admonished by Rule 52(a) of the Federal Rules of Civil Procedure that findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.

Section 117(a) (1) excludes from the term "capital assets" held by a taxpayer property held by the taxpayer primarily for sale to customers in the ordinary course of the trade...

To continue reading

Request your trial
14 cases
  • Parkside, Inc. v. C. I. R.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 2 Diciembre 1977
    ...263 F.2d 460, 461-62 (9th Cir. 1959) (decided under § 117(a)(1) of the 1939 Code, now § 1221); Los Angeles Extension Co. v. United States, 315 F.2d 1, 2-3 (9th Cir. 1963) (same); Bistline v. United States, 260 F.2d 77, 78 (9th Cir. 1958) (same); United States v. Beard, 260 F.2d 81, 82 (9th ......
  • Rockwell v. C. I. R.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 10 Marzo 1975
    ...Internal Revenue, 9 Cir., 1968, 393 F.2d 573, 575, cert. denied, 393 U.S. 845, 89 S.Ct. 132, 21 L.Ed.2d 117; Los Angeles Extension Co. v. United States, 9 Cir., 1963, 315 F.2d 1, 2. We may not overturn the fact finding of the Tax Court unless it is "clearly erroneous." Commissioner of Inter......
  • Gamble v. Comm'r of Internal Revenue
    • United States
    • U.S. Tax Court
    • 30 Agosto 1977
    ...884 (9th Cir.), affirming a Memorandum Opinion of this Court, certiorari denied 423 U.S. 1015; Los Angeles Extension Co. v. United States, 315 F.2d 1, 3 (9th Cir.); Kelley v. Commissioner, 281 F.2d 527, 528 (9th Cir.), affirming a Memorandum Opinion of this Court; United States v. O'Neill, ......
  • Redwood Empire Sav. & Loan Ass'n v. C. I. R.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 11 Agosto 1980
    ...F.2d 460, 462 (9th Cir. 1959). See Parkside, Inc. v. Commissioner, 571 F.2d 1092, 1096 (9th Cir. 1977); Los Angeles Extension Co. v. United States, 315 F.2d 1, 2-3 (9th Cir. 1963). But we have also warned that "each case must be decided upon its particular facts, and the presence of any one......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT