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Various factors to consider in making a determination as to
whether a sale has occurred were summarized in Grodt & McKay
Realty, Inc. v. Commissioner, supra at 1237-1238, as follows:
(1) Whether legal title passes; (2) how the parties
treat the transaction; (3) whether equity was acquired
in the property; (4) whether the contract creates a
present obligation on the seller to execute and deliver
a deed and a present obligation on the purchaser to
make payments; (5) whether the right of possession is
vested in the purchaser; (6) which party pays the
property taxes; (7) which party bears the risk of loss
or damage to the property; and (8) which party receives
the profits from the operation and sale of the
property. * * * [Citations omitted.]
An additional factor to be weighed is the presence or absence of
arm's-length dealing. Falsetti v. Commissioner, 85 T.C. 332, 348
(1985) (citing Estate of Franklin v. Commissioner, 64 T.C. 752
(1975), affd. 544 F.2d 1045 (9th Cir. 1976)).
We recognize that a number of the factors listed above favor
petitioners' contention that the sale of the Algonquin property
was not a "sham" transaction. Nevertheless, the fact remains
that petitioners continued paying the heating, electricity,
security, and maintenance expenses incurred for the property
until sometime in June 1987; i.e., over 5 months after their sale
of the property to Trust No. 234. Petitioners also paid for a
number of repairs to the property prior to its sale to a third
party in 1988. Although petitioners were ultimately reimbursed
for all or part of these expenses, it appears that such
reimbursement did not occur until proximate to the time a
contract of sale was signed between Trust No. 234 and the third
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