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To be engaged in a trade or business the taxpayer must have

a good faith expectation of profit although that expectation need

not

be

reasonable.

Burger

v.

Commissioner,

809

F.2d

355,

358

(7th Cir. 1987), affg. T.C. Memo. 1985-523; Golanty v.

Commissioner, 72 T.C. 411, 425-426 (1979), affd. without

published

opinion

647

F.2d

170

(9th

Cir.

1981).

However,

as

stated by the Supreme Court in Commissioner v. Groetzinger, 480

U.S. 23, 35 (1987):

not every income-producing and profit-making endeavor constitutes a trade or business. * * * to be engaged in a trade or business, the taxpayer must be involved in the activity with continuity and regularity and * * * the taxpayer’s primary purpose for engaging in the activity must be for income or profit. * * *

Although an individual who is engaged in the business of selling

real estate to customers may be characterized as a real estate

dealer, an individual who holds real estate for investment or

speculation, and receives rentals therefrom, is not a real estate

dealer.

Sec.

1.1402(a)-4(a),

Income

Tax

Regs.

Petitioner asserts that he and Mrs. Wood were real estate

dealers and that the properties constituted inventory held for

sale

to

customers.

Whether

property

is

held

by

a

taxpayer

for

sale to customers in the ordinary course of the taxpayer’s

business or for another purpose is a question of fact, and each

property

must

be

considered

individually.

Gartrell

v.

United

States, 619 F.2d 1150, 1153 (6th Cir. 1980); Cottle v.

Commissioner, 89 T.C. 467, 486-487 (1987).

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