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leasing or operating it. In 1968, the taxpayer acquired 300
acres of unimproved land (the Whiteside Farm) which he considered
to be a good investment. In 1973, Griffin Grocery Co. (Griffin)
approached the taxpayer about purchasing 10 acres of the
Whiteside Farm. This transaction failed, but the taxpayer and
Griffin agreed that the taxpayer would construct a warehouse on
the Whiteside Farm, and Griffin would sublease the warehouse from
the taxpayer for 20 years. Griffin had an option to purchase the
land and warehouse after 15 years for a fee or after 20 years
without payment merely by notifying the taxpayer of its election
to exercise the option. The taxpayer stipulated that this
sublease agreement was an installment sale of the warehouse and
land to Griffin.
The Court, in holding that the taxpayer's activity
constituted a trade or business, focused on the preexisting
arrangement to sell/transfer the Whiteside Farm to a specific
party who was committed to take it. S & H, Inc. v. Commissioner,
supra at 244-245. The Court characterized this transaction as
not being a "speculative venture". Id. at 245.
Mr. Finnegan's real estate activity, however, was a
speculative venture, and there was no preexisting arrangement
(nor any arrangement) for the transfer of the Acapulco house to
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