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The distinction between trading in land and treating land as a capital asset is not clear cut and has been tested in the courts many times. The following is a summary of cases where the taxpayers were found to be not trading in land. For cases where trading in land has been found see B5.218, and for cases where it was found that there was trading in land and the land owner also invested in land see B5.218A–B5.218C.

In Reinhold¹, a director of a company trading as a warehouseman bought four houses and sold them later at a profit. The houses were bought for resale and the appellant instructed his agents to sell whenever a suitable opportunity arose. The court held that the fact that the houses were bought with a view to resale did not of itself establish that the transaction was in the nature of trade and that the surplus was not taxable.

Where a partnership purchased land with the declared purpose of holding it as an investment, and part