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profits are more indicative of real property held as an
investment. See Bramblett v. Commissioner, supra at 531; Hancock
v. Commissioner, supra.
JCLC purchased the Jackson Creek property in 1994 and held
it for approximately 4 years before selling parcels to Elite and
Vision in 1998. In a case cited by respondent, the taxpayer was
in the real estate business, but they maintained that the purpose
for holding the property switched to investment when the taxpayer
began full-time activity in the lumber business. See Mauldin v.
Commissioner, 195 F.2d at 716. During an 8-year period the
taxpayer sold real property in 25 separate transactions. The
Court of Appeals for the Tenth Circuit agreed with this Court’s
holding that the taxpayer’s transactions in Mauldin were
sufficiently substantial and frequent to be sales in ordinary
course of the taxpayer’s business. The Court of Appeals found it
important that a significant portion of the taxpayer's income was
derived from the sale of real estate.
In arguing that JCLC’s sales were sufficiently frequent and
substantial, respondent emphasizes that substantially all of
JCLC’s 1998 income derived from gains on the sale of real
property. We do not find this fact to be fatal, as JCLC does not
engage in any other activity from which it could economically
benefit, and two sales of real property by JCLC in 4 years were
of insufficient frequency to support the conclusion that JCLC’s
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