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construction business or (2) used in a trade or business,
excludable, in either case, from capital asset status under what,
respectively, are now paragraphs (1) and (2) of section 1221(a).
The Court of Appeals for the Fifth Circuit found that (1) the
taxpayer’s activities in financing and acting as builder,
developer, and general contractor for the construction of the
plant between 1968 and 1970, when the building was sold,
constituted “an isolated, non-recurring venture”, which did not
constitute a trade or business, and (2) the property sold was
intended for use by the corporation in its manufacturing
business, not by the taxpayer in his business of being a
corporate executive. Reese v. Commissioner, 615 F.2d at 231.
Therefore, the Court of Appeals held that the property was not
excluded from the definition of a capital asset as either
property held for sale to customers in the ordinary course of
business or as property used in the taxpayer’s trade or business.
Id.
In support of his argument that Dover UK’s deemed holding of
the H&C operating assets “for only a moment before the sale” did
not transform those assets into assets used in Dover UK’s
business, respondent relies on the conclusion of the Court of
Appeals in Reese that an “isolated, non-recurring venture” cannot
amount to the conduct of a trade or business. The facts before
the Court of Appeals, and the question it answered, however, are
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