Case Citation
Legal Case Name

MALAT v. RIDDELL Case Brief

Supreme Court of United States1966
383 U.S. 569 86 S.Ct. 1030 16 L.Ed.2d 102 Federal Income Tax Statutory Interpretation

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Case Brief Summary & Legal Analysis

General Brief
3 min read

tl;dr: A taxpayer sold property acquired with a dual purpose of either development or resale. The Supreme Court defined “primarily” in the tax code’s capital asset exclusion, holding it means “of first importance,” not merely “substantial,” clarifying the test for capital gains versus ordinary income.

Legal Significance: This case established the definitive meaning of “primarily” in Internal Revenue Code § 1221(1) as “of first importance” or “principally.” It resolved a circuit split and clarified the test for distinguishing investment property from property held for sale in the ordinary course of business.

MALAT v. RIDDELL Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

A joint venture, in which the petitioner was a participant, acquired a 45-acre parcel of land. The petitioner asserted that the venture’s sole purpose was to develop and operate an apartment project, an investment activity. The government contended that the venture had a “dual purpose”: to either develop the property for rental or to sell it, whichever proved more profitable. The venture encountered significant financing and zoning difficulties, which prevented the development of the apartment project. Consequently, the interior lots of the tract were subdivided and sold, and the profits were reported as ordinary income. After continued frustrations with developing the remaining exterior parcels, the petitioner sold his interest in that property. He reported the profit from this final sale as a long-term capital gain. The Internal Revenue Service (the respondent) challenged this classification, asserting the profit was ordinary income because the property was held “primarily for sale to customers in the ordinary course of his trade or business” under § 1221(1) of the Internal Revenue Code.

Court Holding & Legal Precedent

Issue: Does the word “primarily” in § 1221(1) of the Internal Revenue Code, which excludes property held “primarily for sale to customers” from the definition of a capital asset, mean “substantially” or “of first importance”?

The Court held that “primarily” means “of first importance” or “principally.” The Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute i

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Legal Issue

Does the word “primarily” in § 1221(1) of the Internal Revenue Code, which excludes property held “primarily for sale to customers” from the definition of a capital asset, mean “substantially” or “of first importance”?

Conclusion

Malat provides the controlling definition of "primarily" for capital asset analysis under Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation

Legal Rule

As used in § 1221(1) of the Internal Revenue Code, the word Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore e

Legal Analysis

The Supreme Court resolved a conflict among the courts of appeals regarding Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliq

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Flash Summary

  • Issue: What is the meaning of “primarily” in IRC § 1221(1),
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Exc

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