Harold Hitz Burton

“ Whether or not the crop be real property, the federal income tax upon the gain resulting from its sale is, in its nature, a subject of federal law.
The Commissioner urges two grounds in support of his position that § 117 (j) does not authorize the taxpayer's treatment of the proceeds of the unmatured crop as a capital gain. The first is that the proceeds fairly attributable to the crop are derived from property held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business. ”

“ Therefore, regardless of their stage of development, any gain realized from the sale of growing crops is ordinary income. 'In view of the foregoing, it is held that, for Federal income tax purposes, where citrus groves are sold with fruit on the trees, a portion of the selling price must be allocated to the fruit and the balance to the land and trees. Gain from the sale of the fruit will constitute ordinary income. ”

“ Watson and the Courts of Appeals for the Fifth and Tenth Circuits have placed emphasis upon a claim that, under the law of the state where the land is situated, an unmatured, unharvested crop, for many purposes, is treated as real property. ”