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Petitioner's trade or business consisted of real estate activity
in Hawaii. It acquired, undertook to develop, and held
properties, including the Ginter and Gomes properties, for sale
to customers in the ordinary course of its real estate
development business. We cannot make the type of distinction
petitioner makes between the Ginter and Gomes properties and the
other properties held by petitioner. Petitioner's sales activity
was generally sporadic and occurred in large amounts (in the
millions of dollars). The sales occurring in the years under
consideration were no different from the Ginter and Gomes sale in
1995. Although petitioner decided that further development was
not warranted, the Ginter and Gomes properties were held for sale
and were sold to the first bona fide offeror.
Section 6651(a) Addition to Tax
Respondent also determined that petitioner is liable for an
addition to tax for 1991 under section 6651(a)(1) for its failure
to file a timely return. Section 6651(a)(1) imposes an addition
to tax of 5 percent of the tax due for each month a return is
delinquent, not to exceed 25 percent. The addition does not
apply if the failure to timely file is due to reasonable cause
and not due to willful neglect. Sec. 6651(a)(1). Petitioner
filed its 1991 return past its due date and has failed to show
that its failure to file a timely return was due to reasonable
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