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Respondent determined that the loss is a long-term capital loss
and that the interest paid is investment interest. We agree with
respondent.
Petitioners assert that they are entitled to ordinary loss
treatment because petitioner was a coventurer in the Bridgepoint
project, and that petitioner was in the trade or business of
developing and promoting businesses. Petitioners argue that
petitioner's involvement in the Bridgepoint project was pursuant
to this trade or business. We have already rejected this
argument in our discussion of petitioners' loss regarding
Southern Express, and we incorporate our analysis on that issue
here.4
Accordingly, we find that the $703,659 loss petitioners
sustained with respect to Bridgepoint in 1986 is a capital loss
and that $285,142 of interest petitioner paid in 1986 relating to
Bridgepoint is investment interest.
4 Although petitioners state on brief that "The
Bridgeport [sic] Building transaction was not a direct investment
in real property but a specially designed structure of financing
for a build to suit office building" and "[Petitioner] entered
into the Bridgepoint venture as part of his trade or business of
developing and promoting businesses", petitioners also analogize
the instant facts to S & H, Inc. v. Commissioner, 78 T.C. 234
(1982). In S & H, Inc. v. Commissioner, supra, the Court held
that a transaction was a sale of property in the ordinary course
of a taxpayer's trade or business and the gain thereon was
taxable as ordinary income rather than capital gain. Petitioner
did not own, and therefore did not sell, Bridgepoint. We fail to
see any reasonable analogy between the Bridgepoint facts and the
facts and holding of S & H, Inc. v. Commissioner, supra.
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