Taxation – Federal Income Tax – Renting Out a Single Home as a Trade or Business for Purposes of Capital Loss Carry-Over

Taxpayer, who was not in the real estate business and who was involved in only occasional real estate transactions, inherited a house which he rented out until he sold it at a loss. He treated the transaction as a capital loss, taking advantage of the capital loss carry-over provisions of the Internal Revenue Code. Deficiency assessments were levied against the taxpayer upon the theory that the loss sustained upon the sale of the house was an ordinary loss which could not be carried over to later years. Taxpayer paid the deficiency assessment and sued for a refund. The district court held that the house was not property “used in trade or business,” and that the loss on the sale thereof was a capital loss which could be carried over to succeeding years. On appeal, held, affirmed per curiam. Grier v. United States, (2d Cir. 1955) 218 F. (2d) 603.