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misclassification of its properties. Even though petitioner's
accountants were listed as witnesses in the pretrial memorandum,
it never called the accountants to explain, verify, or discuss
why properties were recorded in a certain manner. See Wichita
Terminal Elevator Co. v. Commissioner, 6 T.C. at 1165. Further,
petitioner did not provide any other evidence to explain its
manner of accounting for the properties.
We note that petitioner's characterization of the Exchange
Property in its records is consistent with its treatment of the
Pacific Street Subdivision in Highland, California. In regard to
75 lots in the Pacific Street Subdivision, petitioner built 25
houses, and installed only improvements on the remaining 50 lots.
However, petitioner kept all 75 lots in the work-in-progress
account until they were sold in 1980. Petitioner classified
income from the sale of the houses and the unimproved lots as
ordinary income. Petitioner also listed its residential
development in Yucaipa under work-in-progress account No. 1160-
81, and its residential development in La Quinata under work-in-
progress account No. 1160-85.
This is compared to petitioner's treatment of the Leedom
Tract, 41 unimproved lots. While Leedom was initially in 1978
classified in the work-in-progress account, petitioner later in
1985 reclassified the property into the "unimproved land and
vacant lots" account No. 1280-31. In regard to the Exchange
Property, which was unimproved land, petitioner never moved the
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