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ordinary course of its business. Essentially, respondent asserts
that the unit 10 property was inventory, and did not qualify for
the nonrecognition provision of section 1031. Ridgemark argues
that it held the unit 10 property for investment purposes.
Consequently, the issue is clearly drawn, and we focus on
the characterization of the unit 10 property held by Ridgemark.
1. Nature and Purpose of the Acquisition of the Property and the
Duration of Ownership
Ridgemark segregated its business of operating Ridgemark
Golf and Country Club from the development and sales of lots.
Development and sales were placed in separate corporate entities.
After the creation of the new corporations, Ridgemark had seven
sales of property, excluding the unit 10 property. The sales
were made over a 12-year period exclusively to Financial or
Construction, the new corporate entities, which developed and
sold real property.
The one significant acquisition (the Bushmont property) was
used to expand Ridgemark Golf and Country Club. Ridgemark also
found it necessary to sell some of its real property holdings to
finance a new 18-hole golf course and other facilities on the
Bushmont property. Ridgemark’s primary activity was the
development and operation of golf courses. To that end, it was
successful, thereby increasing the value of the facility,
including the adjacent real property. Specifically, demand for
the lots and residences in Ridgemark Estates was increased by
coupling them to the golf and country club memberships.
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