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petitioner argues that Farm & Grove satisfies the exception for
sales of residential lots to individuals.
The sale of a residential lot to an individual in the
ordinary course of a taxpayer’s business is not considered a
dealer disposition if neither the seller nor any person related
to the seller can make any improvements on the lot. Sec.
453(l)(2)(B)(ii)(II). In the instant case, the transfer of lots
was not made to an individual. The property transfer was to a
partnership, the Kiddies 38/91 partnership. The common,
ordinary, and plain meaning of section 453(l)(2)(B)(ii)(II)
requires that the transfer be made to an individual. The
language seems to be so unambiguous as to give no alternative but
to apply it precisely as written. We find nothing that would
support an interpretation of section 453(l)(2)(B)(ii)(II) that
differs from the words of the statute, and petitioner has not
provided us with any reasoning to support his argument.
Petitioner also has not provided sufficient evidence that
the 53 lots transferred were residential lots. For purposes of
section 453(l)(2)(B)(ii)(II), a residential lot is a parcel of
unimproved land upon which the purchaser intends to construct (or
intends to contract to have another person construct) a dwelling
unit for use as a residence by the purchaser. Wang v.
Commissioner, T.C. Memo. 1998-127.
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