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held in petitioner's "trade or business." See Black v.
Commissioner, supra at 96 (Court rejected taxpayer's argument
that property acquired in a like-kind exchange but held primarily
for sale should come within section 1031 if the sale was not
within the taxpayer's ordinary course of business); Paullus v.
Commissioner, T.C. Memo. 1996-419. As a result, the exclusion of
"property held primarily for sale" from nonrecognition treatment
in section 1031(a)(1) is broader than the exception to capital
gain treatment in section 1221(1).
Purpose For Which Beaumont Property Was Initially Acquired
Petitioner argues that its original intent in purchasing the
Beaumont Property was to construct duplex or four-plex rental
apartment units. According to petitioner, its intent was to hold
such units for long-term investment. Petitioner relies on Mr.
Baker's testimony regarding discussions with his broker Carl
Mellor about rezoning the property to multi-family use.
We do not find Mr. Baker's statements regarding petitioner's
original intent persuasive. In direct contrast with the
assertion that petitioner intended to hold the property for
construction of duplex or four-plex rental units, its purchase
was contingent upon the tentative subdivision map for the
Beaumont Property being approved by the city of Beaumont. This
tentative map proposed to subdivide the property into 48 lots for
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