In such a situation, the general rule that income from an investment is capital gain applies. See Scott v. United States, 305 F.2d 460, 158 Ct.Cl. 434 (1962); Boeing, supra. Accepting arguendo the defendant's view of the nature of these timber dispositions, there is no reasonable basis for distinguishing, for federal tax purposes, the forest management expenses in Wilmington Trust and Union Bag from those in McMullan.

There can be little doubt that, prior to 1944, a taxpayer engaged in the business of buying and selling of timber (such as plaintiff) was required to report the proceeds from timber sales as ordinary income and was entitled to deduct all ordinary and necessary expense attributable to such sales under section 23(a) of the 1939 Code. The tax treatment is the same today with respect to outright sales by owners holding their timber primarily for sale to customers in the ordinary course of trade or business. See Scott v. United States, Ct.Cl., 305 F.2d 460, where, however, on the facts presented, the court decided that the taxpayers were not timber dealers but were investors whose timber sales constituted sales of capital assets as defined in section 117(a) of the 1939 Code. (Section 1221, 1954 Code.) See Williams, Trends in Forest Taxation, 14 Nat'l Jour. 113, 130-131 (June 1961) and Rowen, Taxation of Income from Timber Properties, 33 Taxes 336, 337.

The tracts had a combined area of 1,340 undeveloped acres and during the entire period Casalina owned them it made no expenditures or improvements of any kind to the properties. This lack of activity by the owner is another indication of investment intent. Charles E. Mieg, 32 T.C. 1314, 1321 (1959); Scott v. United States, 305 F.2d 460 (Ct. Cl. 1962); cf. Walter H. Kaltreider, 28 T.C. 121, 125 (1957), affd. 255 F.2d 833 (C.A. 3, 1958); Estate of M. A. Collins, 31 T.C. 238 (1958). Finally, Casalina made no attempt to sell any of the properties prior to the condemnations.