Loren F. Paullus and Donna Paullus - Page 30

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               principle that a person holding lands under such                       
               circumstances may subdivide it for advantageous sale.                  
               [Id. at 520.]                                                          
          Property sold as undeveloped land with development to be done by            
          the seller under contract for the purchasers does not                       
          automatically cause the land to be held for sale to customers in            
          the ordinary course of the taxpayer’s trade or business.                    
          Reithmeyer v. Commissioner, supra at 813.  In the setting of this           
          case, we find that selling the unit 10 property with the offsite            
          improvements required by Shen did not convert it into a sale in             
          the ordinary course of a trade or business.                                 
               Respondent contends that Ridgemark’s property was zoned for            
          the highest use (residential), and that fact is dispositive of              
          Ridgemark’s intent.  We believe the zoning classification was               
          necessary to maximize possible loans by third parties.  Although            
          residential zoning is a necessary element for subdivision, it               
          does not, per se, convert property to inventory status.                     
               The record does not demonstrate that Ridgemark utilized an             
          agent or broker.  Although the August 12, 1988, minutes mention             
          brokers’ commissions, it appears that Ridgemark did not want an             
          agent to negotiate for it, but that it was willing to pay a                 
          commission or a finder’s fee if a successful sale was finalized.            
               Finally, we find it troublesome that Ridgemark maintained a            
          sales office and that there was a list of 97 people interested in           
          purchasing lots in the unit 10 property.  That is one factor that           
          is indicative of an intention to sell the unit 10 property in the           

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