Margaret Hancock - Page 19

          1968-135 (lots that were held for over 20 years by the taxpayer              
          were held for sale in the ordinary course of business).                      
               3.   Respondent's Other Contentions                                     
               Burson testified that petitioner's representatives Ransil               
          and Kesselman told Burson during the audit of petitioner that                
          Hancock Enterprises kept some lots in each of its subdivisions               
          for petitioner and her husband to hold for investment.                       
          Respondent contends that this shows petitioner held the lots for             
          investment.  We disagree.  At the time of the audit, Kesselman               
          was not an employee of Toback and Ransil had worked only 1 month             
          for Toback and had not yet met petitioner.  Neither was fully                
          familiar with her operations.                                                
               Respondent contends that petitioner's testimony that she                
          could not sell the lots in the late 1980's is not credible                   
          because her son and her nephew were developing property in                   
          Phoenix during those years.  The record does not contain enough              
          information for us to evaluate respondent's assertion.                       
               Respondent contends that the fact that Mark Hancock began               
          doing business in the name of "Camelot Homes" shows that                     
          petitioner was no longer in the real estate business.  We                    
          disagree.  First, Mark Hancock had been in the homebuilding                  
          business since the late 1970's; the fact that he began operating             
          under the name "Camelot Homes" when Hancock Enterprises                      
          liquidated in 1986 does not seem significant to us because                   

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