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1. Whether petitioner's loss on his sale of real estate was
capital or ordinary. We hold it was capital.
2. Whether petitioner is liable for the accuracy-related
penalty determined by respondent under section 6662(a).1 We hold
he is not.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and the exhibits submitted therewith are
incorporated herein by this reference. Petitioner resided in
Carlsbad, California, when he petitioned the Court.
In 1989, petitioner received a written proposal from
Robert L. Grant, Sr. (Mr. Grant), a "hands on" building
contractor licensed by the State of California, memorializing
their understanding concerning Mr. Grant's proposed purchase of a
1-acre lot of land and his development of a single-family
residence thereon. Mr. Grant and petitioner understood that
Mr. Grant needed petitioner's funds to purchase the lot and to
construct the residence. Mr. Grant and petitioner understood
that Mr. Grant would pay petitioner "for the use of his funds,
Interest at the current rate (Generally Prime+ 2 %) and a 50%
share of the profit at the sale and close of escrow of the
1 Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the year in issue, and Rule
references are to the Tax Court Rules of Practice and Procedure.
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