11
means that multiple parties must be involved in the
transaction. * * *
As a result, courts have acknowledged that transactions that
take the form of a cash sale and reinvestment cannot, in
substance, constitute an exchange for purposes of section 1031,
even though the end result is the same as a reciprocal exchange
of properties. Bell Lines, Inc. v. United States, 480 F.2d 710,
714 (4th Cir. 1973); Carlton v. United States, 385 F.2d 238, 241
(5th Cir. 1967). Thus, our inquiry is narrowly focused on
whether the corporation's disposition of the Phoenix property in
this case was a sale, as argued by respondent, or an exchange for
the Coggeshall and Inness properties, as argued by petitioners.
Petitioners contend that the series of transactions here
culminating in the acquisition of the Coggeshall property and the
Inness property with funds resulting from the Phoenix property
transfer, were steps in an integrated transaction, the substance
of which was an exchange of properties within section 1031(a).
In some multiparty transactions, the taxpayer desires to
exchange, rather than to sell, his property, but the potential
buyer owns no property that the taxpayer wishes to receive in
exchange. Thus, some cases involve three or more parties and
multiple conveyances of property in an effort to structure an
exchange instead of a sale and reinvestment. In some of them,
these multiparty transactions have been held to constitute an
exchange within the meaning of section 1031. In so holding, the
courts have allowed taxpayers great latitude in structuring their
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