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entitled to deduct the full amount of his loss under section
165(a).
Respondent's position is that petitioner's loss is limited
by section 165(f) because the East Lyme property was held by
petitioner as a capital asset. Respondent argues that the East
Lyme property does not fall within the section 1221(1) exception
for property held primarily for sale to customers in the ordinary
course of a trade or business because petitioner was not in the
business of buying and selling real estate.
The question of whether property is held primarily for sale
to customers in the ordinary course of the taxpayer's trade or
business is a question of fact that depends on the circumstances
of each case. McManus v. Commissioner, supra at 211. After
fully considering the record in this case, we find that
petitioner did not hold the East Lyme property as a capital
asset.
The East Lyme property construction project and its
subsequent disposition arose within the context of petitioner's
existing construction business.4 See S & H , Inc. v.
Commissioner, 78 T.C. 234, 243 (1982). Respondent attempts to
isolate petitioner's activity with respect to the East Lyme
4 The fact that petitioner simultaneously worked as an
airline pilot does not preclude a finding that he was engaged in
the construction business, since a taxpayer may be engaged in
more than one business. S & H , Inc. v. Commissioner, 78 T.C.
234, 243 (1982); Curphey v. Commissioner, 73 T.C. 766, 775
(1980).
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