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account of the corporation beyond 180 days. There was no
obligation or requirement of any kind upon Penn-Daniels, as the
transferee of the Phoenix properties; with the conclusion of the
settlement of the transaction, as stipulated by the parties,
Penn-Daniels was not required to do anything, was not called upon
to do anything, and in fact did nothing. It just took the
Phoenix properties and went its way. There were no effective
restrictions nor escrow provisions of any kind with respect to
the use of the funds by the corporation as transferor of the
Phoenix properties nor by Penn-Daniels as the transferee.
We must therefore conclude that the overall transaction--
involving involving the transfer of the Phoenix property by the
corporation to Penn-Daniels in August 1991, and thereafter the
acquisition of the Coggeshall and Inness properties from parties
other than Penn-Daniels--did not qualify as a tax-free exchange
under the provisions of section 1031(a). The acquisition of the
latter two properties by the corporation did not take place until
1992; we conclude that the transfer of the Phoenix properties by
the corporation to Penn-Daniels in August 1991 for cash was
taxable under section 1001(c) for 1991 in the normal course, with
gain or loss to be computed as provided in section 1001(a) and
(b).
Decisions will be entered
under Rule 155.
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