Taiyo Hawaii Company, Ltd. - Page 37

                                       - 37 -                                         

          Eline Realty Co. v. Commissioner, 35 T.C. 1, 5 (1960); Tollis v.            
          Commissioner, T.C. Memo. 1993-63, affd. without published opinion           
          46 F.3d 1132 (6th Cir. 1995); Planned Communities, Inc. v.                  
          Commissioner, T.C. Memo. 1980-555.  Additionally, a capital asset           
          may be used in a trade or business, but here petitioner argues              
          that the assets were held for passive investment purposes.                  
          Although the primary purpose for which a taxpayer holds property            
          may change, it is the primary purpose for which the property is             
          held at the time of sale that usually determines its tax                    
          treatment.  Cottle v. Commissioner, 89 T.C. 467, 487 (1987);                
          Biedermann v. Commissioner, 68 T.C. 1, 11 (1977).  However, we              
          may consider events over the course of the ownership to determine           
          the primary purpose for which the property is held at the time of           
          sale.  Suburban Realty Co. v. United States, 615 F.2d 171, 183              
          (5th Cir. 1980).  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 is to be determined on a                
          case-by-case basis.  Gartrell v. United States, 619 F.2d 1150,              
          1153 (6th Cir. 1980); Guardian Indus. Corp. v. Commissioner, 97             
          T.C. 308, 316 (1991).                                                       
               Petitioner's predecessor, Fudosan, acquired the Ginter and             
          Gomes properties between 1973 and 1980 with the express intention           
          of developing and selling them as residential properties.                   
          Fudosan obtained a change in the zoning classification from                 





Page:  Previous  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  41  Next

Last modified: May 25, 2011