Gregory and Patricia Boree sold parcels from a real-estate development and treated the resulting gains as capital gains rather than ordinary income. The Tax Court concluded that the property was held primarily for sale in the ordinary course of business and assessed both a tax deficiency and a substantial-understatement penalty. The Eleventh Circuit affirmed the tax-liability determination. It explained that the classification turned on the taxpayers’ purpose in holding the property and that the record, including the development’s structure, repeated sales, and the taxpayers’ conduct, supported the Tax Court’s finding that the parcels were held for sale. The court nevertheless reversed the statutory penalty. The Commissioner had not shown that the taxpayers lacked substantial authority for their tax treatment under the governing provision, and the Tax Court’s reasoning did not support the penalty on the record before it. The final disposition was therefore affirmed as to the tax deficiency and reversed as to the substantial-understatement penalty.