Neal T. Baker Enterprises, Inc. - Page 19

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          the construction of single-family residential houses.8                      
          Petitioner did not make the purchase contingent on getting R-4              
          multi-family residential zoning.                                            
               Further, when petitioner purchased the Beaumont Property on            
          March 10, 1978, the property was zoned R-1 for single-family                
          residential homes.  Afterwards, petitioner never made any                   
          attempts to have the Beaumont Property rezoned to multi-family              
          residential use.  The Beaumont Property was not suitable for                
          commercial development (such as a fast-food location).                      
               From the evidence, we find that petitioner's initial purpose           
          in acquiring the Beaumont Property was to hold the property for             
          sale (subdivide the property into lots for single-family                    
          residential houses).                                                        
               Intent After Acquisition                                               
               "[W]hile the purpose for the acquisition must be given                 
          consideration, intent is subject to change, and the determining             
          factor is the purpose for which the property is held at the time            
          of" the exchange.  Eline Realty Co. v. Commissioner, 35 T.C. 1, 5           
          (1960); see Cottle v. Commissioner, 89 T.C. at 487.  Thus, we               
          must decide whether petitioner abandoned its original intent and            



               8  At trial, Mr. Baker testified that the lot sizes and                
          configurations of the tentative map would be suitable for the               
          construction of duplexes.  However, the tentative map                       
          specifically proposed single-family residential houses.                     




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