CRI-LESLIE, LLC, DONALD W. WALLACE, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent, 147 T.C. 217

Summary

ISSUE: The issue before the court, which was one of first impression, was whether the LLC was entitled to capital gain treatment under I.R.C. § 1234A for its right to retain forfeited deposits of $9,700,000 from a canceled sale of real property used in its trade or business in the 2008 tax year. HOLDINGS: [1]-It was not; [2]-Since I.R.C. § 1234A expressly refers to property that is "a capital asset in the hands of the taxpayer" and no other type of property, and since property described in I.R.C. § 1231 is excluded explicitly from the definition of "capital asset" in I.R.C. § 1221, the court concluded that the plain meaning of "capital asset" as used in § 1234A does not extend to § 1231 property.