In 1920, C.E. Mauldin (plaintiff) entered an agreement to purchase 160 acres of land in New Mexico. At the time, Mauldin intended to use the land for cattle feeding. However, by the time he acquired the property in 1921, he had changed his mind, in part because the cattle business was no longer a wise or profitable venture. In 1924, Mauldin attempted to sell the land but was unable to do so. In order to facilitate its sale, Mauldin subdivided the land into small lots. In 1939 and 1940, Mauldin actively sold a substantial number of lots by listing the property with real estate agents and advertising the lots throughout town. At this point, Mauldin decided to hold onto what remained of the original tract of land for investment purposes. He then entered the lumber business in 1940, after which he no longer actively advertised the lots. However, between 1940 and 1945, Mauldin’s land became the subject of popular demand. Thus, Mauldin regularly sold lots between 1940 and 1945, selling a substantial portion of them in 1945. By 1945, Mauldin only had 20 acres remaining in his possession. A large portion of his income during this time was attributable to the sale of lots. In his tax return for 1944 and 1945, Mauldin characterized the lots he sold as long-term capital assets. The Commissioner (defendant) disallowed this characterization and treated gain from the sales as ordinary income. The Tax Court sustained the Commissioner’s ruling.