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buyer would be permitted to construct a house on the property if
a buyer so desired. While this fact is relevant to our decision,
for the following reasons we nonetheless conclude that the land
sold by petitioner and EIC does not satisfy the residential real
estate exception for dealer dispositions.
It is abundantly clear that the land sold by EIC was
marketed to potential buyers as a speculative investment. The
offering materials exclusively focused on financial factors such
as return on investment, capital preservation (safety), and tax
considerations. Further, petitioner testified that neither he
nor EIC has ever represented to potential buyers that the land
being sold was suitable for use as residential lots. There is no
evidence in the record to suggest that buyers purchased land from
petitioner or EIC with the intention of building dwelling units
on that land. In fact, the overwhelming weight of evidence
strongly suggests that no buyer ever constructed a dwelling unit
on land purchased from EIC or petitioner. We therefore find that
buyers did not purchase land from petitioner or EIC with the
intent to construct a dwelling unit on the property. Accord-
ingly, we conclude that petitioner and EIC improperly elected to
use the installment sales method for reporting gain because they
are dealers in real estate and they failed to satisfy the resi-
dential real estate exception for dealer dispositions contained
in section 453(l)(2)(B).
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