Char-Lil Corporation - Page 22

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             selling commercial real estate property" and "an integral                
             part of Petitioner's business was to finance the sale of                 
             the commercial real estate property which it sold to its                 
             customers."  According to petitioner, it is "a bona fide                 
             operating company" that is "outside of the intent of the                 
             penalizing effect of the personal holding company tax."                  
             Petitioner argues that its principal officer, Mr. McKelvey,              
             developed customers by first renting a property to the                   
             prospective buyer.  Petitioner also argues that "the                     
             depressed commercial real [estate] market in Lawton,                     
             Oklahoma during the late 1980's and early 1990's"                        
             substantially slowed petitioner's business activity by                   
             requiring petitioner to hold properties until market                     
             conditions improved in the mid 1990's.  After making a                   
             property-by-property analysis, petitioner argues that it                 
             is "a real estate operating company acquiring commercial                 
             properties, improving those properties and selling those                 
             properties to buyers which it has located and nurtured as                
             customers."  Finally, petitioner argues that it has                      
             consistently engaged in the business of "acquiring,                      
             improving, leasing and selling property to its established               
                  Petitioner argues that if it had held all of the                    
             property as rental property, "then clearly its rental                    
             income would have exceeded 50% of its adjusted ordinary                  

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Last modified: May 25, 2011