512 F.2d 882 (9th Cir. 1975), 73-2140, Rockwell v. C. I. R.

Docket Nº:73-2140.
Citation:512 F.2d 882
Party Name:Michael L. ROCKWELL, and Regina Rockwell, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
Case Date:March 10, 1975
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 882

512 F.2d 882 (9th Cir. 1975)

Michael L. ROCKWELL, and Regina Rockwell, Petitioners-Appellants,



No. 73-2140.

United States Court of Appeals, Ninth Circuit

March 10, 1975

Rehearing Denied June 13, 1975.

Page 883

[Copyrighted Material Omitted]

Page 884

Bernard A. Berkman, Cleveland, Ohio, and Murray C. Lertzman, Beverly Hills, Cal. (argued), for petitioners-appellants.

Louis Bradbury, Atty., Tax Div. (argued), Washington, D.C., for respondent-appellee.

Before LUMBARD, [*] KOELSCH and DUNIWAY, Circuit Judges.


DUNIWAY, Circuit Judge:

The Rockwells, husband and wife, who filed joint income tax returns for the years in dispute and whom we shall call Rockwell for convenience, appeal from a decision of the Tax Court. Tax Court Memorandum 1972-133, 31 T.C.M. 596, 72 T.C.Memo. 621. The Tax Court found that twelve real properties sold or exchanged by Rockwell during the taxable years 1963 through 1967 were held primarily for sale to customers in the ordinary course of a trade or business. Based on these findings, the Tax Court held that: (1) the gain or loss on "like kind" exchanges of certain of the properties should have been recognized; (2) the gain from the sales and exchanges was taxable as ordinary income rather than capital gain; (3) Rockwell was not entitled to certain deductions for depreciation of the properties; and (4) Rockwell was liable for the self-employment tax. Internal Revenue Code of 1954 ("IRC"), 26 U.S.C. §§ 1031(a), 1221(1), 167, 1401, respectively. See also Treas. Reg. § 1.167(a)-2. Rockwell's counsel properly concede that the validity of holdings (3) and (4) depend upon the correctness of holdings (1) and (2). We affirm.

I. The Tax Court's Findings.

Whether property is held primarily for sale in the ordinary course of trade or business is a question of fact. Estate of Freeland v. Commissioner of 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 Internal Revenue v. Duberstein, 1960, 363 U.S. 278, 291, 80 S.Ct. 1190, 4 L.Ed.2d 1218; Northwest Acceptance Corp. v. Commissioner of Internal Revenue, 9 Cir., 1974, 500 F.2d 1222, and cases there cited.

In a brief over 100 pages, Rockwell's counsel analyze the record exhaustively and repetitively and cite a great many cases. The length of the brief seems to be a function of the complexity of Rockwell's dealings and of the amount of money involved, more than $738,000.00. We commend counsel's diligence but not their editorial judgment. They could have said everything that they do say in about half as many pages. Almost always, when we grant permission to file an oversized brief, we have cause to regret having done so.

We said in Los Angeles Extension Co. v. Commissioner of Internal Revenue, supra, 315 F.2d at 3, a case which, like this one, involved the trade or business issue:

It is rare indeed that one will find any precedent value in applying the decision of one case to the facts of another case. At the most, other cases decided by the courts on this subject may be persuasive or suggestive of the approach of the courts to cases where the facts may be somewhat similar.

For this reason, we do not burden this opinion with an analysis of the cases that counsel cite. None announces any principle that would require a reversal here.

Page 885

Moreover, it would serve no useful purpose to repeat here the facts which are detailed in the Tax Court's memorandum decision. As to certain properties, the Tax Court found that they were held as investments and for the production of...

To continue reading