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income or expenses are attributable to this activity for the year
at issue.
Petitioner, thereafter, started a real estate development
and marketing activity using the same CIS trade name. He
envisioned purchasing parcels of real estate, developing such
property for residential use by building, for sale, luxury "build
to suit" homes that would be constructed by petitioner on the
real estate. In 1983 and 1986, petitioner purchased two vacant
lots located at Bridgewater, New Jersey (Bridgewater property),
and Clinton/Readington, New Jersey (Clinton property), for such
development. With respect to the Bridgewater property, although
the record is not clear, it appears that, as of 1990, the year at
issue, petitioner had never obtained a building permit for that
property. However, petitioner, thereafter, obtained a permit to
build a single family home on the Bridgewater lot and, in 1992,
secured a $175,000 loan for the purposes of building and selling
a house on the property. The house has never been built. With
respect to the Clinton property, petitioner obtained a building
permit shortly after the purchase of the property and, in 1988,
"secured plans on houses" that he wanted to build for potential
buyers. This entailed designing home floor plans with the help
of builders and engineers, determining a reasonable cost and
profit for each house plan, listing the property for sale on a
"build to suit" basis, and obtaining financing. Since 1989,
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