Sale of property produced capital loss that could not offset ordinary income, Tax Court holds

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June 9, 2022
2022-0892

Sale of property produced capital loss that could not offset ordinary income, Tax Court holds

The Tax Court has held (William E. Musselwhite, Jr., et ux. v. Commissioner) that real property lots held by a taxpayer were not stock in trade, inventory or property held for sale to customers but, rather, capital assets; therefore loss on the sale of the property, exceeding $1m, was a capital loss and could not offset ordinary income. After initially assessing accuracy-related penalties, the IRS stipulated that penalties were not warranted.

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