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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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