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of its trade or business was sold or exchanged". Thus,
petitioner has not shown that a sufficient amount of its
interest income should be treated as rents, such that
petitioner's aggregate rental income is excluded from the
computation of personal holding company income pursuant to
section 543(a)(2). Accordingly, we agree that petitioner
has not overcome respondent's determination that petitioner
is a personal holding company.
Petitioner's argument that it is "a bona fide
operating company which buys, improves, rents and sells
commercial real property" is based upon the testimony
of its principal stockholder, Mr. McKelvey, and an overview
of petitioner's purchases and sales of property. Unlike
petitioner, we believe that, with several exceptions,
petitioner was in the business of developing and holding
real property for rental. This finding is based upon all
of the facts and circumstances of this case which suggest
that petitioner's activities with respect to each of the
subject properties were undertaken for the principal
purpose of holding and renting the property and not to sell
it. In this connection, we note the long holding period of
most of the properties, petitioner's failure to advertise
any property for sale, and petitioner's failure to retain
real estate agents, except in several instances. This
finding is also consistent with Mr. McKelvey's statements
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