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The conferees note that the designation requirement in
the conference agreement may be met by designating the
property to be received in the contract between the
parties. It is anticipated that the designation
requirement will be satisfied if the contract between
the parties specifies a limited number of properties
that may be transferred and the particular property to
be transferred will be determined by contingencies
beyond the control of both parties. For example, if A
transferred real estate in exchange for a promise by B
to transfer property 1 to A if zoning changes are
approved and property 2 if they are not, the exchange
would qualify for like-kind treatment. * * * [H. Conf.
Rept. 98-861, at 866 (1984), 1984-3 C.B. (Vol. 2) 1,
120; emphasis supplied.]
After the year in issue, the Commissioner issued regulations
providing that, in general, a taxpayer may identify either (1) a
maximum of three properties as replacement properties, or (2) any
number of properties provided the fair market value of the
designated properties does not exceed 200 percent of the fair
market value of all properties relinquished by the taxpayer in
the exchange. Sec. 1.1031(k)-1(c)(4), Income Tax Regs., T.D.
8346, 1991-1 C.B. 150, 157. The regulations, however, are
prospective only, as they apply to transfers of property made on
or after June 10, 1991, or in certain cases, to transfers made on
or after May 16, 1990.1 Sec. 1.1031(k)-1(o), Income Tax Regs.,
1
Because the Commissioner’s regulations are not applicable to
the transactions in issue, we express no opinion concerning the
regulations’ validity. We note, however, where a statute is
silent or ambiguous with respect to an issue that is the subject
of a regulation, a reviewing court need only decide whether the
regulation is based on a permissible construction of the statute.
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837, 843 (1984).
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