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properties was too large to warrant development. Petitioner did
not receive any revenue from either the Gomes or Ginter
properties during the years at issue. Petitioner did not
advertise the properties for sale, and no bona fide purchase
offers were received until 1995.
On May 2, 1995, an unrelated company, Towne Development of
Hawaii, Inc., made an offer to purchase and did eventually
purchase the Ginter and Gomes properties. The purchase price was
to be approximately $3 million. A possible cloud on the title,
however, caused the price to be reduced to $2.4 million.
With respect to the joint venture, T-3 Wailea partnership,
petitioner owned a 50-percent interest and was also the managing
partner. The joint venture owned approximately 600 acres of land
immediately above Wailea, Hawaii. In 1990, petitioner liquidated
its interest in the T-3 Wailea partnership in exchange for a
$5,963,431 distribution, resulting in a $2,450,722 profit.
Sometime in 1990, petitioner acquired a 50-percent interest
in Pines Plaza Associates, a Hawaiian general partnership engaged
in real property construction. Petitioner utilized certain
portions of advances from Seiyo and Taiyo Development Co. (Taiyo
Development) to develop the Pines Plaza project.
Petitioner obtained financing from unrelated financial
institutions including Mitsubishi Trust & Banking (Mitsubishi
Trust), Bank of Tokyo, and Dai-Ichi Bank in order to conduct its
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