15
Nevertheless, an examination of the facts in this record
leads us to conclude that the disposition of the Phoenix property
in August 1991 and the acquisition of the Coggeshall and Inness
properties in 1992 do not qualify for nontaxable treatment under
section 1031(a), because although the alleged escrow agreement
with the Citizens National Bank was not with the corporation or a
disqualified person, as described in section 1.1031(k)-
1(g)(3)(ii)(A), Income Tax Regs., nevertheless the escrow
agreement did not expressly limit the corporation's right to
receive or use the cash held in the escrow account, as specified
by section 1.1031(k)-1(g)(3)(ii)(B), Income Tax Regs. The facts
show here that the so-called escrow agreement entered into
between the corporation, the Citizens National Bank, and Penn-
Daniels was nothing more than a facade. At the settlement of the
Phoenix property disposition to Penn-Daniels on August 9, 1991,
the stipulated facts recite that the settlement funds were
actually received by the corporation, and thereafter were
transferred to the bank under the so-called escrow agreement.
Further, there were no restrictions upon the right of the
corporation, as transferor of the Phoenix property, to use the
proceeds in any way which the corporation saw fit. The money was
simply held by the bank for future disposition at the direction
of the corporation. The only requirement was that the
corporation designate the desired replacement properties in 45
days, and the bank was not required to hold the funds for the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011