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agricultural or unplanned to single or multifamily residential.
Due to a series of mergers, in 1986, petitioner, as a successor
in interest, became the owner of the properties. Generally,
petitioner continued with the approach begun by Fudosan and
sought to develop the properties until it was subsequently
ascertained that development costs would be insuperable.
Petitioner maintained the zoning conditions and paid certain fees
with respect to the properties. Petitioner held these properties
as undeveloped land and derived no revenue from them during the
taxable years in issue.
On its Federal income tax returns, petitioner described its
activity as real estate development and property investment and
real estate investment and development. In its 1989, 1990, and
1991 returns, petitioner reported $13,800,857, $13,830,400, and
$11,481,780, respectively, in "Land Development Costs". The
significant real property items, other than the condominium in
Waikiki, were the Ginter and Gomes properties. Petitioner
consistently reported on its returns that the costs of carrying
the Ginter and Gomes properties were related to its business as a
developer of land.
There is no question that the Ginter and Gomes properties
were originally intended for development and that regular
business activity was pursued to that end. Development plans
were drafted and submitted to the planning commission in Hawaii.
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