-16-
Respondent contends that petitioner intended to hold the
lots for investment until the real estate market improved, and
that petitioner was not in the business of selling or developing
real estate because she was not developing properties and was not
looking for development opportunities.
We disagree. Petitioner began selling the 48 lots as soon
as she received them from Hancock Enterprises. This suggests
that she was not holding them for investment. The fact that
sales occur in the course of a liquidation neither compels nor
forecloses a finding that property was held primarily for sale in
the ordinary course of a trade or business. See Ehrman v.
Commissioner, 120 F.2d 607, 610 (9th Cir. 1941), affg. 41 B.T.A.
652 (1940) and Heller v. Commissioner, 41 B.T.A. 1020 (1940); Van
Bibber v. Commissioner, T.C. Memo. 1985-344. We disagree with
respondent's contention that petitioner did not hold the lots for
sale because she was not in the real estate development business.
Even if petitioner was not developing real estate, she was in the
business of selling lots to customers.
Respondent contends that petitioner did not devote much time
or effort to selling her lots, and that she did not advertise or
use real estate agents or salespeople. Respondent also contends
that the fact that petitioner borrowed office space at Mark's
place of business shows that she was not operating a real estate
business.
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