Christine C. Deignan - Page 5

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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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