- 42 -
engaged in the business of subdividing and developing before and
during the taxable year 1989.20 We note that section 1031 use of
"held primarily for sale" does not require that the property be
sold in the ordinary course of petitioner's trade or business (as
provided in section 1221(1)).
Books and Records
Courts have used a taxpayer's books and records as evidence
of an intent to change the character of an asset.
As of March 1979, petitioner classified the Beaumont
Property in Account No. 1160 for finished houses and work-in-
19(...continued)
locations which were leased from third parties, (iv)
developing new fast-food sites for Baker's Burgers and
leasing those new sites to Baker's, (v) leasing fast-food
sites to third parties, and (vi) constructing homes for
sale.
20 Respondent asserts that a real estate "subdivider" is
one that obtains land, goes through the process of filing a final
map to subdivide property into lots, and sells the lots. And
that a real estate "developer" is one that obtains the lots,
installs the improvements on the lots, builds houses on the lots,
and sells the houses.
Petitioner contends that respondent's analysis of the term
"subdivider" and "developer" is inaccurate. Petitioner states
that: "With respect to the homes built by Enterprises, it was
its practice to either purchase subdivided land or to both
subdivide land and construct homes on the subdivided lots."
Mr. Dotson testified that there is potential for overlap in
the terms "subdivider" and "developer."
We need not worry about the exact definition of subdivider
and developer because we find that petitioner was engaged in the
business of both, depending on the development. To the extent
properties were subdivided, petitioner intended to build
improvements on these properties. Further, while petitioner
contends it no longer subdivided raw land into lots after 1988,
the record does not support this contention.
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