Margaret Hancock - Page 7

               Petitioner's counsel, John Pattullo, advised her for tax                
          purposes to liquidate Hancock Enterprises and distribute its                 
          assets to the trust.  On December 31, 1986, Hancock Enterprises              
          owned 48 lots from subdivisions it had developed.  On that date,             
          Hancock Enterprises adopted a plan of liquidation under section              
          337 (as then in effect), filed final corporate tax returns, and              
          distributed the 48 remaining lots to the trust.  After the                   
          liquidation, the trust owned the 48 lots.                                    
          D.   Lots Petitioner Sold From 1987 to 1996                                  
               1.   Petitioner's Sales Efforts                                         
               Selling lots was petitioner's primary activity from 1987 to             
          1994.  Petitioner maintained liability insurance and paid                    
          property taxes on the lots at all times.  She met with people who            
          wanted to build houses on the lots.  Some prospective buyers who             
          were interested in buying lots contacted petitioner.  She reduced            
          the price of some lots.  She put "for sale" signs on some lots.              
          She attended some homebuilders' meetings and used her contacts in            
          the real estate industry to help sell the lots.                              
               Petitioner listed some of the 48 lots for sale with Trevor              
          Hancock from 1987 to 1991.  He listed those lots on the Multiple             
          Listing Service (MLS).  Two of petitioner's properties were                  
          listed on the MLS in 1987 and 1988, three in 1989, one in 1990,              

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