- 16 - time the identification was made,5 neither petitioner nor his adviser was on notice that the Commissioner would take the position that the number of replacement properties that could be identified pursuant to the statute generally would be limited to three. Consequently, a trap for unwary taxpayers was set.6 We also do not accept respondent’s contention that petitioner’s identification of replacement properties did not satisfy section 1031(a)(3)(A) because the determination of the particular replacement property or properties to be received was not based on contingencies beyond the control of the parties to the exchange. As noted above, the legislative history relied on by respondent states: “It is anticipated that the designation requirement will be satisfied if * * * the particular property to be transferred will be determined by contingencies beyond the control of both parties.” H. Conf. Rept. 98-861, supra at 866, 1984-3 C.B. (Vol. 2) at 120. As we stated above, we believe that Congress was merely illustrating that a contingent identification 5 We note that the proposed regulations setting forth the Commissioner’s construction of the statute and legislative history were not published until May 16, 1990, after the transactions in issue occurred. Sec. 1.1031(a)-3, Proposed Income Tax Regs., 55 Fed. Reg. 20282. 6 The difficulty taxpayers faced in interpreting the legislative history has been noted by at least one commentator. Wasserman, “Mr. Mogul’s Perpetual Search for Tax Deferral: Techniques and Questions Involving Section 1031 Like-Kind Exchanges In a World of Changing Tax Alternatives”, 65 Taxes 975, 1000 n.211 (1987).Page: 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