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in carrying on a trade or business. An activity qualifies as a
trade or business if the taxpayer's primary purpose for engaging
in the activity is for income or profit and the activity is
performed with continuity and regularity. Commissioner v.
Groetzinger, 480 U.S. 23, 35 (1987). A hobby does not qualify as
a business. Id. Determining whether a taxpayer's activities
rise to the level which constitutes "carrying on a business"
requires an examination of the facts in each case. Higgins v.
Commissioner, 312 U.S. 212, 217 (1941).
In determining the nature of a taxpayer's activities with
respect to real property, courts consider the following factors:
the nature and purpose of the acquisition of the prop-
erty and the duration of the ownership; the continuity
of sales or sales-related activity over a period of
time; the volume and frequency of sales; the extent to
which the taxpayer or his agents have engaged in sales
activities by developing or improving the property,
soliciting customers, and advertising; and the substan-
tiality of sales when compared to other sources of
taxpayer's income. * * * [Polakis v. Commissioner, 91
T.C. 660, 670 (1988).]
Although during the years at issue Mr. Hawthorne performed a
variety of services relating to certain of the properties, for
which he was not compensated, he did not sell, or advertise for
sale, any of those properties during those years. Indeed, Mr.
Hawthorne had not decided throughout the years at issue and
thereafter to the time of the trial in this case what he wanted
to do with the properties in question, although he preferred to
give them away to family members, rather than pay tax on any
gains that he would realize if he sold or otherwise disposed of
them. On the record before us, we find that petitioners have
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