- 8 - property at the time that the agreement to exchange is signed. Biggs v. Commissioner, supra at 913-914. Exchange property need not be identified at the time an agreement to effect an exchange is made. Alderson v. Commissioner, 317 F.2d 790 (9th Cir. 1963), revg. 38 T.C. 215 (1962). Proceeds of the sale of property to be exchanged may be placed in escrow and, provided the taxpayer does not constructively receive the proceeds, an exchange involving property acquired with the proceeds will qualify for the benefits of section 1031(a). Garcia v. Commissioner, 80 T.C. 491, 499-500 (1983). The taxpayer may locate and negotiate for the property to be exchanged. Biggs v. Commissioner, supra at 915. The buyer need not hold title to the exchange property received by the taxpayer. Biggs v. Commissioner, 632 F.2d at 1177. Where a preference for exchange is manifest, and an exchange actually occurs, courts generally ignore the possibility that a sale of the taxpayer’s property may occur if the exchange does not actually take place. Mercantile Trust Co. v. Commissioner, 32 B.T.A. 82, 87 (1935). Although considerable latitude has been allowed by the courts with respect to the structure of like-kind exchanges, that latitude is not open ended. Estate of Bowers v. Commissioner, 94 T.C. 582, 590 (1990). A taxpayer’s intent to effect a section 1031(a) transaction is not determinative of the transaction’s tax treatment, although intent is given deference where the partiesPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011