Larry L. Beeler and Cynthia J. Beeler - Page 18

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            C.    Whether the Sand Was Stock in Trade or Property Held                                  
                  Primarily for Sale                                                                    
                  Respondent contends that petitioners' unmined sand was stock                          
            in trade or other property held primarily for sale.                                         
                  A taxpayer may not defer gain or loss under section 1031 for                          
            the exchange of stock in trade or other property held primarily                             
            for sale.  Sec. 1031(a)(2)(A).  Whether property is stock in                                
            trade or held primarily for sale for purposes of section 1031 is                            
            a question of fact.  See Verito v. Commissioner, 43 T.C. 429,                               
            441-442 (1965).                                                                             
                  Respondent points out that petitioners operated a sand mine                           
            on the 76.5 acres throughout the time they owned it.  They                                  
            obtained a Pasco County sand mine permit before they bought the                             
            land and had the permit modified twice to increase the amount of                            
            sand they could remove from 600,000 cubic yards to 2.49 million                             
            cubic yards, of which they eventually removed 1.28 million cubic                            
                  While petitioners did mine sand from the 76.5 acres, that                             
            was not their primary purpose in holding the land.  Their primary                           
            purpose was to expand their adjacent mobile home park, and that                             
            purpose never changed during the time they owned the 76.5 acres.                            
            This intent is shown by Mrs. Beeler's testimony and by                                      
            petitioners' consistent statements on permit applications filed                             
            with Pasco County in 1984, 1985, 1989, and 1990.                                            

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