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Petitioner argues that his activity on the Harwichport
property constituted a trade or business, or, in the alternative,
that the Harwichport property was held for the production of
income. In order to be engaged in carrying on a trade or
business pursuant to section 162, the taxpayer must be involved
in the activity with continuity and regularity, and the
taxpayer's primary purpose for engaging in the activity must be
for income or profit. Commissioner v. Groetzinger, 480 U.S. 23
(1987); Juda v. Commissioner, 90 T.C. 1263, 1287 (1988), affd.
877 F.2d 1075 (1st Cir. 1989). The term "property held for the
production of income" pursuant to section 212 includes income
from the disposition of the property. Mitchell v. Commissioner,
47 T.C. 120, 128 (1966). Petitioner was not in the trade or
business of reconditioning dilapidated structures for resale.
This was petitioner's first real estate purchase. He worked on
the Harwichport property in his spare time while employed full
time as a police officer. Petitioner was not in the trade or
business of renting real estate in 1990. Petitioner testified
that he offered the property for rent in 1989, but we find that
the property was not suitable for sale or rent until late 1990.
He first tried to sell the Harwichport property on October 28,
1990, but when he could not sell it, he rented the property in
April 1991. Petitioner produced no advertisements indicating the
Harwichport property was available for rent in 1989 or 1990.
During discovery, respondent requested the advertisements related
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