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stock in trade of the taxpayer or other property of a
kind which would properly be included in the inventory
of the taxpayer if on hand at the close of the taxable
year, or property held by the taxpayer primarily for
sale to customers in the ordinary course of his trade
or business * * *
Section 1221(1) differentiates between the "'profits and losses
arising from the everyday operation of a business' * * * and 'the
realization of appreciation in value accrued over a substantial
period of time'". Malat v. Riddell, 383 U.S. 569, 572 (1966)
(quoting Corn Prods. Refining Co. v. Commissioner, 350 U.S. 46
(1955), and Commissioner v. Gillette Motor Transp., Inc., 364
U.S. 130 (1960)). "[P]rimarily" means "principally" or "of first
importance." Id.
Whether property is held by a taxpayer "'primarily for sale
to customers in the ordinary course of * * * business'" is a
question of fact. S & H, Inc. v. Commissioner, 78 T.C. 234, 242
(1982) (quoting sections 1221(1) and 1231(b)(1)(B)). Courts
consider numerous factors in deciding this issue, and no one
factor controls. See Biedenharn Realty Co. v. United States, 526
F.2d 409, 415 (5th Cir. 1976). Petitioner bears the burden of
proving that her property was held for the purpose she contends.
See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
The following factors indicate whether property is held
primarily for sale to customers in the ordinary course of a trade
or business: (a) The frequency and substantiality of sales, (b)
the nature of the taxpayer's business, (c) the purpose for which
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