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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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