Cummings, Pell, and Sprecher, Circuit Judges.
These appeals were generated by a suit for refund of federal income taxes assessed and collected for the years 1958 through 1963. After a jury trial, judgment was entered for taxpayer*fn1 in the sum of $68,194.39, plus statutory interest, with each party to pay its own costs. The taxpayer was considered entitled to capital gains treatment on the gain from the sale of Florida land during 1958 and the years 1960 through 1963 because the jury found that the property sold during those years was not held primarily for sale to customers in the ordinary course of business. On the other hand, as to 1959, the jury's verdict was in favor of the Government on the ground that the property sold in 1959 was held primarily for sale to customers during the ordinary course of business. The Government appealed with respect to all years except 1959, and taxpayer has cross-appealed with respect to that year.
In 1947, taxpayer, a resident of Evanston, Illinois, retired and purchased a winter home in Clearwater, Pinellas County, Florida, but his permanent residence continued to be in Evanston. From 1947 to 1952, he purchased 2,300 acres of land in two large tracts from private parties and 5,700 lots principally from the State of Florida at tax sales, all in Pinellas County. He hoped for a dramatic increase in their value because an anticipated population increase would cause a substantial demand for the land he had purchased in a depressed market in a limited peninsular area.
Taxpayer testified that these properties were purchased for investment rather than for a land-sale operation. He did not notice the land for sale nor place nor authorize the placing of signs thereon, nor otherwise promote its sale. He did not give brokers listings for its sale. He only held a broker's license during part of 1951 and 1952. He made no improvement on the land and voted against special assessments for improvements. If he made any effort to sell his property, he could have sold it all in three to five years. The amount of land he sold as a reluctant seller averaged less than 1% of his holdings per year, and he received a price two or three times above what other owners obtained. During the critical 1958-1963 period, taxpayer was not even usually in Florida except during part of the winters of 1958 and 1959. The unsolicited offers to purchase his land were therefore forwarded to him in Illinois after the interested purchasers ascertained ownership from Pinellas County land records.
Taxpayer accepted offers where the price would reflect appreciation at least equal to what he considered the investment value. Although his average purchase price of lots sold during the taxable years was approximately $90, the average selling price was approximately $1650. During the same six-year period, 20% of the lots and 5 parcels of acreage, accounting for approximately one-third of his gain during the period, resulted from sales made under threat of condemnation.
In 1962, after a jury trial, taxpayer won a similar tax refund suit with respect to Pinellas County land sold in 1951 and 1952. Thereafter, the Government asserted deficiencies against taxpayer for 1958 through 1963, on the same ground as in the 1962 suit, namely, that his gain was taxable as ordinary income because he held the property for sale to customers in the ordinary course of business.
The following table reveals the basic facts of the 1958-1963 land sales:
No. of No. of No. of Average %age of
Lots Trans- Parcels Holding Taxpayer's
Year Sold actions Sold Period Tot. Income Profit
1958 39 25 2 8.4 Yrs. 20.9% $52,681.09
1959 103 31 1 10.5 25.9 ...