- 39 -
An architect was retained to prepare plans for the proposed
subdivisions. The possibility of developing a golf course in
connection with the proposed Gomes subdivision was studied. At
some point, however, it appears that petitioner became aware that
it was not financially feasible to continue the development.
Although petitioner originally intended the Ginter and Gomes
properties to be developed, impediments to development such as
drainage, zoning, and lack of accessibility intermittently
stalled development plans. These factors impeded development
and, ultimately, made development a financial impossibility from
petitioner's point of view. No efforts were made to sell the
property during the years in issue. A bona fide offer and sale
occurred during 1995, 4 years after the last tax year under
consideration.
Generally, courts view frequent sales that generate
substantial income as tending to show that property was held for
sale rather than investment. Suburban Realty Co. v. United
States, supra at 181; Biedenharn Realty Co. v. United States, 526
F.2d 409 (5th Cir. 1976). On the other hand, less frequent sales
resulting in large profits tend to show that property was held
for investment. Bramblett v. Commissioner, 960 F.2d 526 (5th
Cir. 1992), revg. T.C. Memo. 1990-296.
We hold that the Ginter and Gomes properties are step 1
assets includable in the computation of the excess interest tax.
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