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Commissioner, 30 T.C. 26 (1958); Lewenhaupt v. Commissioner, 20
T.C. 151 (1953), affd. 221 F.2d 227 (9th Cir. 1955).
In Neill v. Commissioner, supra, the taxpayer did not
participate in the management, operation, or maintenance of the
real property other than collecting the rents which her agent in
the United States sent her. We find petitioner's reliance on
Neill, as it relates to petitioner's business purpose and
generally to its business activity, to be inapposite. Petitioner
was engaged in the business of real property development and was
formed for the purpose of acquiring, managing, developing, and
selling real property in Hawaii.
Petitioner argues that a person engaged in the business of
real property development may also hold real property for passive
purposes. In that connection, petitioner contends that the
Ginter and Gomes properties were not used in a U.S. trade or
business and do not generate ECI. See sec. 1.882-5(b)(1), Income
Tax Regs. We disagree. Although there was no sale or
disposition of the properties during the years in issue,
petitioner's real estate activities were not those of a passive
investor.
A taxpayer may hold real property primarily for sale to
customers in the ordinary course of his trade or business and, at
the same time, hold other real property for investment purposes.
Maddux Constr. Co. v. Commissioner, 54 T.C. 1278, 1286 (1970);
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