C.I.R. v. Reinhold (1953), 34 TC 389 (C.S. (1st. Div.))

Before going on to find that an admission of an intention to resell at the first opportunity did not necessarily mean that rental houses were acquired as adventures in the nature of trade rather than as investments, Lord Carmont quoted a statement by Lord Dunedin that "the fact that a man does not mean to hold an investment may be an item of admittance tending to show whether he is carrying on a trade or concern in the nature of trade in respect of his investments", and went on to state (p. 392):

I draw attention to Lord Dunedin's language being used with reference to 'an investment', meaning thereby, as I think, the purchase of something normally used to produce an annual return such as lands, houses, or stocks and shares. The language would, of course, cover the purchase of houses as in the present case, but would not cover a situation in which a purchaser bought a commodity which from its nature can give no annual return.

The Court upheld the finding of the Commissioner that the resale of four rental houses three years after their acquisition by an individual who was not in the business of the purchase and sale of estates was realized on capital account, notwithstanding the taxpayer's admission that he bought the properties not as residences for himself but for sale, and had instructed his agents to sell whenever a suitable opportunity arose. Lord Carmont stated (p. 393):

"If the commodity could not produce an annual return by retention in the hands of the purchaser, then the conclusion may easily be reached that the venture was a trading one. If, however, the subject of the transaction is normally used for investment - land, houses, stocks and shares - the inference is not so readily to be drawn from an admitted intention in regard to a single transaction to sell on the arrival of the suitable preselected time or circumstance and does not warrant the same definite conclusion as regards trading or even that the transaction is in the nature of trade."