David Taylor Enterprises, Inc. & Subsidiaries - Page 11

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          section 7491 to prove the classic cars were held as an investment           
          and subject to capital treatment.12                                         
          B.  Williford Factors                                                       
               Our Court generally uses a number of factors to determine              
          whether property is held for investment or held for sale.  See              
          Williford v. Commissioner, T.C. Memo. 1992-450.13  In Williford,            
          we examined whether a taxpayer’s art collection was held                    
          primarily for sale to customers in the ordinary course of                   
          business.  The taxpayer in Williford was a part-time art dealer             

               12Petitioner also argues that respondent must abide by Rev.            
          Rul. 75-538, 1975-2 C.B. 35, which presumes that a taxpayer                 
          engaged in the trade or business of selling motor vehicles holds            
          its vehicles primarily for sale, and not as an investment.  We              
          find it unnecessary to address Rev. Rul. 75-538, supra, because             
          we find that the evidence favors petitioner’s position as to the            
          character of the classic cars, irrespective of the presumption.             
               13Other courts use similar factors to determine whether                
          property is held for investment or for sale.  For example, the              
          Court of Appeals for the Fifth Circuit, where appeal will lie,              
          uses the following factors:  (1) The nature and purpose of the              
          acquisition of the property and the duration of the ownership;              
          (2) the extent and nature of the taxpayer’s efforts to sell the             
          property; (3) the number, extent, continuity and substantiality             
          of the sales; (4) the extent of subdividing, developing, and                
          advertising to increase sales; (5) the use of a business office             
          for the sale of the property; (6) the character and degree of               
          supervision or control exercised by the taxpayer over any                   
          representative selling the property; and (7) the time and effort            
          the taxpayer habitually devoted to the sales.  United States v.             
          Winthrop, 417 F.2d 905, 909-910 (5th Cir. 1969) (citing Smith v.            
          Dunn, 224 F.2d 353, 356 (5th Cir. 1955)); see also Howell v.                
          Commissioner, 57 T.C. 546, 554 (1972) (six factors); Maddux                 
          Constr. Co. v. Commissioner, 54 T.C. 1278, 1284 (1970) (nine                
          factors).  The factors are usually used to classify real estate.            
          In Williford v. Commissioner, supra, the factors were used to               
          classify artwork.  We have found no cases where the factors were            
          used to classify cars.                                                      

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