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of an individual, section 165(c) limits the deduction to (1)

losses incurred in a trade or business, (2) losses incurred in

any transaction entered into for profit, even though not

connected with a trade or business, and (3) losses of property

not connected with a trade or business or with a transaction

entered into for profit, if such losses arise from fire, storm,

shipwreck, or other casualty, subject to limitations set forth in

section 165(h).

Petitioner asserts that the Florida house was held primarily

for sale to customers in the ordinary course of either (1) his

and Mrs. Wood’s trade or business as a real estate dealers or (2)

their family partnership’s business of constructing the house for

immediate

sale.

not

real

estate

We

have

dealers.

found

that

Further,

petitioner

and

we

do

not

think

Mrs.

that

Wood

the

were

arrangement petitioner had with his brother and Mrs. Wood’s

mother constituted a partnership that carried on a business.

There is no evidence in the record that a partnership was

created.

Neither

petitioner’s

brother

nor

Mrs.

Wood’s

mother

testified

at

the

trial

in

these

cases.

The

records

from

the

bankruptcy proceeding lead us to believe that the funds advanced

by petitioner’s brother and Mrs. Wood’s mother were debts of

petitioner and of Mrs. Wood.

Furthermore, the activities of constructing, owning, and

selling the Florida house were not carried on as a trade or

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