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In the instant case, petitioner purchased land with the
intention of subdividing it into residential lots and
constructing single family residences thereon. By doing so,
petitioner substantially improved the property. Furthermore,
petitioner listed the property with Rancho, and through Rancho,
petitioner advertised the property in newspapers and on posted
signs.5 Over a 2-year period, petitioner sold the 58 homes built
in the subdivision. After adjusting for concessions by the
parties, petitioner had gross receipts of $2,750,130 (not
including the $423,770 in notes subject to the present dispute),
cost of goods sold of $2,680,990, and expenses of $133,119 from
his construction business. Based on the record before us, we
conclude that petitioner held the homes in Pajaro Dunes primarily
for sale to customers in the ordinary course of his business;
therefore, the sales were on account of dealer dispositions and
do not qualify as installment sales. Accordingly, petitioner
must include the face value of the notes in his 1995 income.6
In reaching our holdings herein, we have considered all
arguments made by the parties, and to the extent not mentioned
5 We note that in California an “agent may be authorized to
carry forward any ordinary business transaction, the agent's act
becoming the act of his principal.” Whittaker v. Otto, 10 Cal.
Rptr. 689, 692 (Ct. App. 1961); see also Channel Lumber Co., Inc.
v. Simon, 93 Cal. Rptr. 2d 482, 486 (Ct. App. 2000).
6 As a result, we need not evaluate whether petitioner
correctly applied the installment method.
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