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utilities, and taxes, the property was repossessed by Scott
Coggeshall and the Coggeshall Co. on January 7, 1992. The Bross
agreement expired on November 1, 1991.
On September 21, 1990, the corporation entered into a
contract to purchase 9.53 acres of real estate (Phoenix
property), which was zoned industrial and was located next to the
corporation's offices and shop in Macomb, Illinois. The Phoenix
property was purchased and held for productive use in the
corporation's trade or business or for investment in connection
with its construction activities. The purchase price of the
property was $105,000. On August 9, 1991, the adjusted basis of
the Phoenix property in the hands of the corporation was $57,085.
Penn-Daniels, Inc., is a Delaware corporation authorized to
do business in Illinois. It operates a chain of retail stores.
Around 1990, Penn-Daniels developed an interest in acquiring
property in Macomb, Illinois, as the prospective location for a
new store. It engaged the services of EST Acquisitions, Inc.
(EST), to act as its agent in locating and securing a store site
in Macomb. In January 1991, the corporation and EST entered into
a real estate purchase agreement, as amended, for the sale of the
Phoenix property by the corporation to Penn-Daniels for $382,000.
Said purchase agreement, assigned by EST to Penn-Daniels,
provided that the corporation, as seller, might choose to
designate certain properties, allegedly for purposes of achieving
a tax-free exchange under section 1031, and Penn-Daniels, as
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