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Country Club, as well as the existing residential developments
that Construction and Financial developed and sold. By itself,
property sold as undeveloped land, with development to be done
under contract for the purchasers, does not automatically reflect
that the land is held for sale to customers in the ordinary
course of a taxpayer’s trade or business. Reithmeyer v.
Commissioner, 26 T.C. 804, 813 (1956).
Finally, we note that Ridgemark held the unit 10 property
for approximately 4 years prior to the transaction in question.
This relatively long holding period also tends to support the
conclusion that Ridgemark held the property for investment
purposes. Ridgemark held a relatively significant amount of real
estate from 1977 and 1987 with only limited sales to related
companies. This is more indicative of an investment motive in
Ridgemark.
We note that a sale of a large tract in a single transaction
does not necessarily mean that the property was not held for sale
in the ordinary course of a taxpayer’s trade or business. See
Major Realty Corp. v. Commissioner, 749 F.2d 1483, 1489 (11th
Cir. 1985), affg. in part and revg. in part on another issue T.C.
Memo. 1981-361; Williams v. United States, 329 F.2d 430 (5th Cir.
1964); Lawrie v. Commissioner, 36 T.C. 1117, 1121 (1961).
However, Ridgemark does not have a history of continuously and
regularly purchasing raw land that was later sold for
development.
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