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the memberships to the public. It was evident to the joint
venturers at the time, and it is evident to us now, that
the note issued by the club in connection with the club's
purchase of the villas and land from the joint venture
would not be satisfied until all of the club memberships
were sold to the public. The evidence does not support
respondent's assertion that the joint venturers purchased
the unsold club memberships for investment or for any
reason other than for sale to customers. Accordingly, we
find that petitioner held the subject memberships primarily
for sale to customers. See generally King v. Commissioner,
89 T.C. 445, 457-458 (1987); Cottle v. Commissioner, supra;
Kemon v. Commissioner, 16 T.C. 1026 (1951).
The second prong of our inquiry is whether petitioner
held the club memberships for sale in the ordinary course
of a trade or business. Sec. 1221(1). To find that a
taxpayer was engaged in a trade or business, we must find
that the taxpayer was involved in the activity with
"continuity and regularity" and that the taxpayer's primary
purpose for engaging in the activity was "for income or
profit." Commissioner v. Groetzinger, 480 U.S. 23, 35
(1987).
The focus of the inquiry in these cases is whether
petitioner's activities rise to the level of a trade or
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