- 30 -
ordinarily belies the contention that the property is being held
‘for investment’ [or for personal purposes] rather than ‘for
sale.’” Major Realty Corp. & Subs. v. Commissioner, 749 F.2d
1483, 1488 (11th Cir. 1985), affg. in part and revg. in part T.C.
Memo. 1981-361.
Petitioner and Mrs. Wood did not make frequent sales of
property. Over the 20-year period that included 1977 through
1996, petitioner and Mrs. Wood sold four properties that they
owned--the Virginia house in 1977, the North Carolina property in
1989, the New Jersey house in 1994, and the Florida house in
1996.
The infrequency of sales is highly probative that the
properties were held for personal or investment reasons rather
than for sale. We conclude that the residences, the vacation
properties, the undeveloped land in Florida, and the partnership
interest in MSPR, Ltd., were not properties purchased or held for
sale to customers. We find that petitioner and Mrs. Wood were
not real estate dealers and hold, therefore, that the disallowed
amounts are not business expenses deductible under section 162.
B. Loss on Sale of Florida House
Petitioner claimed an ordinary loss on the foreclosure of
the Florida house in 1996. Section 165(a) allows a deduction for
any loss sustained during the taxable year that is not
compensated for by insurance or otherwise. However, in the case
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011