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Second, the court held that a sale occurred because the benefits
and burdens of ownership passed under the contract. As discussed
above, petitioners did not pass sufficient benefits and burdens
of ownership to the Sopers under the option agreement to
constitute a complete sale until August 5, 1991. Third, the
Court of Appeals in Baertschi reasoned that the sellers were not
entitled to section 1034 deferral because "income tax provisions
which exempt taxpayers under given circumstances from paying
taxes (or as here, postponing them) are strictly construed."
Baertschi v. Commissioner, supra at 498-499. The circumstances
here are, from petitioners' standpoint, at best ambiguous.
Strict construction of the statutory requirement that petitioners
sell the Blue Lake property within 2 years of July 19, 1991,
requires us to conclude that they did not meet that requirement.
3. Whether Petitioners Could Compel the Sopers To
Exercise the Option
Petitioners rely on Awalt v. Commissioner, T.C. Memo. 1987-
42, to support their position that we should treat the option
agreement as a sale. In Awalt v. Commissioner, supra, the
taxpayer did not qualify for section 1034 treatment because the
sale of his residence in Hawaii occurred in 1972 when he received
2(...continued)
not require conveyance of title within one year from the date of
formation of the contract."
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