David Taylor Enterprises, Inc. & Subsidiaries - Page 16

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               2.  Substantiality of Sales                                            
               Courts generally view frequent sales generating substantial            
          income as tending to show that property was held for sale rather            
          than for investment.  Suburban Realty Co. v. United States, supra           
          at 181; Biedenharn Realty Co. v. United States, supra.  Where               
          substantial profits result from capital appreciation, however,              
          and not from the taxpayer’s efforts, infrequent sales generating            
          large profits tend to show that the property was held for                   
          investment.  Williford v. Commissioner, T.C. Memo. 1992-450                 
          (citing Bramblett v. Commissioner, supra).                                  
               While the cars in this case appreciated in value, most of              
          the gains from the sales were due to the dealership’s efforts in            
          restoring and refurbishing the cars.  Further, the dealership               
          consistently sold the classic cars before the years at issue for            
          a profit, with the exception of two sales.  The dealership                  
          reported all sales at ordinary income rates, as it did for sales            
          of new and used cars.  This factor favors petitioner.                       
               3.  Duration of Ownership                                              
               Longer holding periods suggest an asset is held for                    
          investment.  See Williford v. Commissioner, supra.  The Court in            
          Williford found that holding periods of 19 years and 13 years               
          served as indicia that the paintings were held for investment.              
          The classic cars in this case were held 7 to 10 years.  Of the              
          classic cars sold prior to the years at issue, seven were held              

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