- 17 -
gain or loss to such exchanges or distributions as are directly a
part of the transaction specifically described as a
reorganization in section 368(a)." Sec. 1.368-2(g), Income Tax
Regs. Rather than pointing to a plan of reorganization, the
evidence clearly indicates that FSRC adopted a plan of complete
liquidation.
Alternatively, petitioner contends that the transaction
qualifies for nonrecognition treatment under the involuntary
conversion provisions of section 1033. Section 1033 provides for
nonrecognition of gain if property is compulsorily or
involuntarily converted into property similar or related in
service or use to the property so converted. Sec. 1033(a)(1).
Included within this provision is property that is taken by the
Government by condemnation or that is sold by the taxpayer
pursuant to the threat or imminence of condemnation. Sec.
1033(a).
In order to qualify for nonrecognition treatment, however,
the taxpayer must have owned the property that was involuntarily
converted. In Fuchs v. Commissioner, 80 T.C. 506, 511 (1983), we
explained that "We have held previously that in the case of a
partnership, the election under section 1033 can be made only by
the partnership and not by the partners, individually." We see
no reason for a different result in the context of a corporation
and its shareholders. It is clear that FSRC owned Deep Hollow
Park. Therefore, although petitioner received all the corporate
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011