The taxpayer had sold a gas station in 1990 to a third party ("Soni"). As a result of contamination found when Soni tried to resell the gas station in 1995, the asset substantially decreased in value and Soni failed to make the final balloon payment due under the purchase agreement. The taxpayer then reacquired the property, with a view to reselling it, for consideration that included the extinguishment of Soni's payment obligation to it.
The Tax Court Judge had not erred in finding that the taxpayer had not reacquired the gas station from Soni as inventory in light of such facts as the motivation of the taxpayer to protect its investment in the property and the absence of evidence that the subsequent sale of the property by the taxpayer could generate a profit.