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subject properties was foreseeable as of the valuation date8, see
Ithaca Trust Co. v. United States, 279 U.S. 151 (1929)(subsequent
events are not considered in determining fair market value,
except to the extent that they were reasonably foreseeable at the
date of valuation); Estate of Scanlan v. Commissioner, supra, and
consequently there was the requisite likelihood that the
corporations would sell the properties, the estate has failed to
show that it was likely that either of the corporations would pay
built-in capital gains tax upon sale.
As a general rule, gain realized from the sale or other
disposition of property must be recognized. See sec. 1001(c).
Section 1033 provides an exception to this general rule by
allowing gain realized from certain involuntary conversions to be
deferred. Realized gain can be deferred in its entirety under
section 1033 if: (1) nonrecognition treatment is elected; (2)
qualified replacement property is purchased within the time
limits specified; and (3) the cost of the qualified replacement
property equals or exceeds the amount realized on the conversion.
Sec. 1033(a)(2)(A). Among other things, an involuntary
8 The only evidence submitted which tends to show that the
estate was aware of potential condemnation of the real property
on the valuation date, and not thereafter, is a magazine article
entitled Nashville Neighborhoods Downtown Turning Renderings into
Reality, published in the Aug. 1992 issue of Nashville Business
and Lifestyles. The article discusses revitalization of the
downtown Nashville area, and the proposal appears to encompass
properties owned by ESI and ISC.
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