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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
yards.
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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