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ordinary course of a taxpayer's business is not considered a
dealer disposition. Sec. 453(l)(2)(B)(ii)(II).
Petitioners do not dispute that they were dealers in real
property.6 However, the Wangs and EIC argue that they satisfy
the exception for sales of residential lots. Respondent asserts
that the land petitioner and EIC sold was not residential proper-
ty, because EIC's buyers never intended to build homes on the
property they purchased from EIC. Petitioner argues that the
land was zoned in such a way that the buyers could have built a
house on the property if they had desired to do so. Based upon
the evidence and the following analysis, we agree with respon-
dent.
With the Tax Reform Act of 1986, Pub. L. 99-514, sec. 811,
100 Stat. 2365, Congress enacted section 453C which generally
denied installment sale treatment to dealer dispositions of
property but provided an exception for sales of residential lots.
See sec. 453C(e)(4)(A)(i)(II), applicable to sales between
March 1, 1986, and December 31, 1987. The Omnibus Budget
5(...continued)
(II) any residential lot, but
only if the taxpayer (or any
related person) is not to make any
improvements with respect to such
lot.
6In fact, in their respective petitions, both petitioner and
EIC state that they are dealers in real estate.
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