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During 1985, the Monmouth County Board of Freeholders was
considering the purchase and conversion of 457 acres of farmland
into a public park, 366 acres of which was owned by HGCC. In
July 1986, Monmouth County filed a declaration of taking against
279 acres of land owned by HGCC and deposited $14,524,600, the
property's estimated fair market value, with the Superior Court
of New Jersey. The condemnation proceedings, including the
amount of the condemnation award, were reported in local
newspapers; petitioner read some of these articles and attended a
few of the public hearings concerning the condemnation.
Mr. Acquaviva consulted his accountant, Louis Defalco (Mr.
Defalco), regarding the tax implications of the condemnation
award. Mr. Acquaviva and Mr. DiMisa were advised by Mr. Defalco
that they had the option of replacing the property and deferring
the recognition of any gain or of recognizing the gain currently.
Mr. DiMisa also suggested that Mr. Acquaviva and he discuss the
matter with Herbert Gannette (Mr. Gannette), a tax attorney. In
the interim, HGCC reported a gain in the amount of $7,678,378
from the condemnation on its 1986 Form 1065, U.S. Partnership
Return of Income. HGCC issued checks to each partner for
$3,869,244, which represented each partner's share of the
proceeds from the condemnation award after deduction of expenses.
Mr. Acquaviva deposited his share into his personal checking
account. However, HGCC subsequently filed an amended Form 1065,
electing to defer this gain pursuant to section 1033.
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Last modified: May 25, 2011