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Code. For individuals, the deduction of capital losses is
limited to the lesser of $3,000 a year or the excess of such
losses over capital gains. Sec. 1211(b). Any remaining capital
loss is deductible in the succeeding taxable year as provided in
section 1212(b).
Capital loss treatment applies primarily to the disposition
of capital assets. Section 1221 defines a capital asset as
"property held by the taxpayer (whether or not connected with his
trade or business)," but excludes four categories of assets, only
one of which is of relevance here, namely:
(1) stock in trade of the taxpayer or other property
of a kind which would properly be included in the
inventory of the taxpayer if on hand at the close of
the taxable year, or property held by the taxpayer
primarily for sale to customers in the ordinary course
of his trade or business; [Emphasis added.]
The issue, whether the property in question was a capital asset,
therefore turns on whether petitioner was engaged in the "trade
or business" of selling real estate, holding the property for
sale to customers in the ordinary course of such a business. We
hold that she was not.
A number of factors have been considered in determining
whether property is held primarily for sale to customers in the
ordinary course of business. A non-exclusive list of these
factors includes:
(1) The purpose for which the asset was acquired; (2)
the frequency, continuity, and size of the sales; (3)
the activities of the seller in the improvement and
disposition of the property; (4) the extent of
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