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rented the same, and subsequently sold such properties at a
profit; and (2) purchased raw land, cleaned and leveled off the
land, and resold the land at a profit.
Petitioners sold the Palm Springs House in July 1991, only 5
months after purchasing it, for $377,500. Petitioners claimed a
capital loss of $133,592 with respect to this sale. On their
1991 Federal income tax return, petitioners offset the gain on
their sale of the Thousand Palms Property, and certain other
gains, against the capital loss claimed from the sale of the Palm
Springs House. Having offset these gains, petitioners reported a
short-term capital loss carryover on their 1991 return in the
amount of $49,292. Petitioners then utilized portions of the
loss carryover in the years in issue to offset certain capital
gains in those years.
Respondent determined that petitioners did not incur a
capital loss on the sale of the Palm Springs House and therefore
disallowed the carryover to the years in issue.3
OPINION
Profit Motive
Respondent's determination in the notice of deficiency
essentially embodies the notion that the loss from the sale of a
3 For reasons not discussed in the record, respondent did
not determine any deficiency for 1991; i.e., for the year of the
alleged loss.
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