- 41 -
held the property for sale "in the ordinary course of his
trade or business". E.g., Cottle v. Commissioner, 89 T.C.
467, 486-487 (1987); Buono v. Commissioner, 74 T.C. 187,
199-200 (1980); Howell v. Commissioner, 57 T.C. 546, 555
(1972).
The purpose of section 1221(1) is to differentiate
between the profits and losses arising from the every-
day operation of a business, on the one hand, and the
realization of appreciation in value accrued over a
substantial period of time, on the other hand. E.g.,
Bramblett v. Commissioner, 960 F.2d 526, 534 n.2 (5th
Cir. 1992), revg. T.C. Memo 1990-296 (1990); Devine v.
Commissioner, 558 F.2d 807, 814 (5th Cir. 1977), affg.
T.C. Memo. 1975-251 (1975). In the context of section
1221(1), the word "primarily" means "of first importance"
or "principally". Malat v. Riddell, 383 U.S. 569, 572
(1966). Thus, if a taxpayer has several reasons for
holding property, the sale purpose must be more than
substantial; it must be the primary purpose. Ferguson
v. Commissioner, T.C. Memo. 1987-257.
Petitioners bear the burden of proving that the club
memberships in Mr. Lemons' hands were not capital assets
as defined by section 1221. Rule 142(a). This issue is a
question of fact involving the manner in which petitioner
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