James T. and Goldie L. Ryan - Page 12

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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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