-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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