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the ordinary course of his trade or business”.
In deciding whether a taxpayer holds property “primarily for
sale to customers in the ordinary care of his trade or business”,
the Court must evaluate the particular facts of each case. The
Court considers various factors such as: (1) The purpose for
which the property was initially acquired; (2) the purpose for
which the property was subsequently held; (3) the extent to which
improvements, if any, were made to the property by the taxpayer;
(4) the frequency, number, and continuity of sales; (5) the
extent and nature of the transactions involved; (6) the ordinary
business of the taxpayer; (7) the extent of advertising,
promotion, or other active efforts used in soliciting buyers for
the sale of the property, (8) the listing of property with
brokers; and (9) the purpose for which the property was held at
the time of sale. See Maddux Constr. Co. v. Commissioner, 54
T.C. 1278, 1284 (1970); Hustead v. Commissioner, T.C. Memo. 1994-
374.
The record does not support a finding that petitioner was in
the business of renovating buildings for resale. At most, the
record supports that petitioner made an investment in the
Longport property, which was subsequently converted into a rental
real estate business as a result of a depressed real estate
market. Petitioner’s operating expenditures (1987 through 1993
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Last modified: May 25, 2011