-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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