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Springs House for resale and moved to Missouri for
semiretirement. Once in Missouri, there is no indication that
petitioners engaged in any activity designed to enhance the
profitability of their alleged "investment". Regarding the
rental business of residential property, we have previously held
that "Generally, residential property is not purchased for
investment purposes where the property is located in a distant
city if there are additional costs involved in its management."
O'Neill v. Commissioner, supra. We think that given the
circumstances, the same principle applies here. We find that the
amount of time petitioners spent on the purchase and resale of
the Palm Springs House indicates that petitioners did not possess
the requisite profit motive.
As to petitioners' expertise, we find that although
petitioner Mr. Taylor was a real estate agent, he did not use his
expertise in this endeavor. First, petitioner Mr. Taylor used
his real estate agent's license in the contracting business and
not in the sales business. Next, any familiarity that petitioner
Mr. Taylor may have had with the residential real estate market
was limited to low-price housing and raw land in the Thousand
Palms locality. The Palm Springs residential real estate market
was different from the Thousand Palms residential real estate
market.
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