- 32 -
526 F.2d 409 (5th Cir. 1976). Conversely, infrequent sales
resulting in large profits tend to show that property was held
for investment. Bramblett v. Commissioner, 960 F.2d 526 (5th
Cir. 1992).
The unit 10 property was sold to Shen for $11,250,000.
Previously, Ridgemark was willing to sell the unit 10 property to
Shen for $10 million, which incorporated approximately $1,500,000
of offsite improvements, with a $2,563,454 basis. Consequently,
at the sale, Ridgemark received net proceeds of approximately $9
million. This is evidence of long-term appreciation as opposed
to normal inventory markup. We also recognize that Ridgemark’s
golf operating revenue is approximately twice the revenue from
real estate transactions. This factor quantitatively reflects
that Ridgemark’s primary source of income and business operation
was the management of a golf resort facility. The real estate
sales were, at best, peripheral.
There was a significant difference between the unit 10
property and prior property sales. Ridgemark incurred costs of
approximately $2 million in completing the unit 10 property,
compared to about $600,000 expended in connection with the seven
parcels that had been sold to Financial or Construction. Of the
$2 million, approximately $1,600,000 was spent for improvements
in satisfaction of the Agreement with Shen. We do not agree with
respondent that Ridgemark would have, in any event, made these
improvements irrespective of whether Shen completed the sale.
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