-17-
We disagree. Petitioner sold the lots by putting "for sale"
signs on some of the lots and using her real estate contacts.
She also paid real estate commissions of about $40,000 from 1987
to 1992. Petitioner begin selling lots in 1987 and sold 25
percent of them before 1991 when the market rebounded, 75 percent
of them before the years in issue, and all but one of them in
less than 10 years. The fact that petitioner sold the lots
without using an outside agent, without having her own real
estate sales office, and without incurring advertising expenses
or broker's fees suggests that petitioner devoted enough time and
effort to selling the lots. See United States v. Winthrop, 417
F.2d at 912, in which the U.S. Court of Appeals for the Fifth
Circuit stated:
While advertising, solicitation and staff are the usual
components of a business, they are not a necessary
element in either the concept or the pragmatics of
selling. Here it is evident that the taxpayer was
quite successful in selling the lots without the
assistance of these usual props. It is not necessary
that customers be actively and fervently and
frenetically sought. * * *
Respondent contends that the fact that petitioner did not
improve the 48 lots she received from Hancock Enterprises shows
that she held them for investment. We disagree. Petitioner and
her husband's corporation, Hancock Enterprises, fully developed
the lots before petitioner acquired them. Petitioner paid real
estate taxes, maintained liability insurance, and made sure that
the lots were kept clean, the grass was cut, and the shrubs were
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