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In petitioner’s proposed findings of fact relating to this
issue, he did not assert any facts or point to any exhibits or
testimony that would indicate that the lots in question were
zoned so that a buyer would be permitted to construct a house on
the property if the buyer desired or that the lots were marketed
to potential purchasers as residential lots suitable for building
dwelling units on the land as opposed to a speculative
investment. Id. Petitioner has not met his burden of showing
that he satisfied the residential real estate exception for
dealer dispositions.
Since section 453 is substantively unavailable to Farm &
Grove, the established realization and recognition principles
under section 1001 are controlling. Under section 1001(b), the
amount realized from the sale or other disposition of property
shall be the sum of any money received plus the fair market value
of the property (other than money) received.
2. Fair Market Value of Cash Equivalent
Petitioner argues, in the alternative, that the gain to Farm
& Grove is not the face value of the note but its market value.
Petitioner asserts that the note had no value, and therefore, no
gain accrued to Farm & Grove.
To establish that the note had a fair market value of zero,
petitioner testified that the note had no value because County
Bank would not accept it. Petitioner further testified that
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