A developer’s multiple, unsuccessful attempts to develop a property led to a district court’s decision that the eventual bulk sale be taxed as ordinary income. 1 Over a period of years, the developer incurred expenses on a number of engineering and development plans for the property and sought out investors and partners. Eventually, a second developer purchased the property — paying a lump sum to clear title on the property and satisfy the debts of the seller to former partners.
The district court viewed the flurry of activities by the seller in an attempt to develop the property as sufficient to conclude that he held the property primarily for sale to customers as a business, not as an investment . This decision was made even in light of the fact that the seller owned no other land and had ended his attempts to develop the property and seek backers years prior to the sale.
1 Allen et al v. U.S. Et Al, Cite as 113 AFTR 2nd 2014-2262, Code Sec(s) 61;1221, (DC CA), 5.28.2014
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