Loren F. Paullus and Donna Paullus - Page 29

                                       - 29 -                                         

               The relative paucity of purchases and sales, coupled with              
          the other factors discussed herewith, suggests that the real                
          property was peripheral to the business of operating Ridgemark              
          Golf and Country Club.  Pritchett v. Commissioner, 63 T.C. 149,             
          164 (1974).                                                                 
               Accordingly, unit 10 was held for a relatively long period             
          of time and was acquired for investment purposes.                           
          2.  The Extent and Nature of the Taxpayer’s Efforts To Sell the             
               Ridgemark and Paullus sought to sell assets in order to                
          concentrate on developing a golf resort in Paicines.  The                   
          question is whether there were any acts of sales promotion on the           
          part of Ridgemark or its agents.  For example, improving and                
          developing the land is a possible avenue to promote sales.  See             
          Reithmeyer v. Commissioner, supra at 813 ("The obvious reason for           
          the platting and subdividing was to attract buyers.").  The Fifth           
          Circuit Court of Appeals in Estate of Barrios v. Commissioner,              
          265 F.2d 517 (5th Cir. 1959), revg. 29 T.C. 378, 383 (1957),                
          while reversing the Tax Court for other reasons, agreed with the            
          general principle that improvement and development of land was an           
          avenue to promote sales.  The Court of Appeals stated:                      
                    The idea of selling a large tract of land in lots                 
               embraces necessarily the construction of streets for                   
               access to them, the provision of drainage and the                      
               furnishing of access to such a necessity as water.  It                 
               is hardly conceivable that taxpayer could have sold a                  
               lot without doing these things.  To contend that                       
               reasonable expenditures and efforts, in such necessary                 
               undertakings are not entitled to capital gains                         
               treatment is to reject entirely the established                        

Page:  Previous  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  Next

Last modified: May 25, 2011