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for investment despite the fact that the taxpayer filed a final
map and constructed about $1,600,000 in off-site improvements
(with the sales price of $11,250,000) on the property. Id.
Petitioner compares the facts in Paullus to its situation, where
it did not record a final map and constructed no improvements on
the Exchange Property. Petitioner asserts that its activities
were minor and preliminary compared to those taken by Paullus.
In making its decision, the Court in Paullus looked at
several factors, in addition to the fact of filing a final map
and constructing improvements. Ridgemark, the taxpayer in
Paullus, segregated its business of operating Ridgemark Golf and
Country Club from the development and sales of lots, which were
done by two other corporations. Ridgemark consistently reported
its business activity as the operation of a golf and country
club. The Court noted that Ridgemark's actions (long holding
period, only limited sales to its related companies, paucity of
purchases and sales) indicated an investment motive in holding
the property.
The Court's holding in Paullus was based on the specific
factual situation presented in that case. While petitioner
argues that the Paullus and this case are similar, we find that
the instant case's factual situation is distinguishable from the
situation surrounding the taxpayer in Paullus. In Paullus,
Ridgemark formed Ridgemark Financial Corp. and Ridgemark
Construction Corp. to carry on the residential lot activities.
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