Orville E. Christensen and Helen V. Christensen - Page 6

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          section 1031(b).  Accordingly, the controversy is narrowly                  
          framed:  was the series of transactions involved herein a                   
          qualifying nontaxable exchange within the limitations of section            
          1031(a)(3); and, if not, does the integrated transaction qualify            
          for income tax purposes as an installment sale, to be reported              
          under the provisions of section 453?                                        
               Somewhat prophetically, this Court said in Barker v.                   
          Commissioner, 74 T.C. 555, 560-561 (1980):                                  
                    This case involves another variant of the                         
               multiple-party, like-kind exchange by which the                        
               taxpayer, as in this case, seeks to terminate one real                 
               estate investment and acquire another real estate                      
               investment without recognizing gain.  The statutory                    
               provision for nonrecognition treatment is section 1031.                
               The touchstone of section 1031, at least in this                       
               context, is the requirement that there be an exchange                  
               of like-kind business or investment properties, as                     
               distinguished from a cash sale of property by the                      
               taxpayer and a reinvestment of the proceeds in other                   
               property.                                                              
                    The "exchange" requirement poses an analytical                    
               problem because it runs headlong into the familiar tax                 
               law maxim that the substance of a transaction controls                 
               over form.  In a sense, the substance of a transaction                 
               in which the taxpayer sells property and immediately                   
               reinvests the proceeds in like-kind property is not                    
               much different from the substance of a transaction in                  
               which two parcels are exchanged without cash.  Yet, if                 
               the exchange requirement is to have any significance at                
               all, the perhaps formalistic difference between the two                
               types of transactions must, at least on occasion,                      
               engender different results.                                            
                    The line between an exchange on the one hand and a                
               nonqualifying sale and reinvestment on the other                       
               becomes even less distinct when the person who owns the                
               property sought by the taxpayer is not the same person                 
               who wants to acquire the taxpayer's property.  This                    
               means that multiple parties must be involved in the                    
               transaction.  * * *  [Fn. ref. and citations omitted.]                 




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