Larry L. Beeler and Cynthia J. Beeler - Page 21

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            separation."  Watson v. Commissioner, supra at 552.  We think the                           
            instant case is more like Butler Consol. Coal Co. v.                                        
            Commissioner, supra, because the unmined sand was not separated                             
            from the land.  Respondent contends that Butler Consol. Coal is                             
            distinguishable from this case.  Respondent points out that                                 
            petitioners operated the sand mine until the day they exchanged                             
            the land, while the taxpayer in Butler Consol. Coal stopped                                 
            operating the mine 11 years before the transaction at issue.  We                            
            disagree that the distinction is material.  The Court in Butler                             
            Consol. Coal observed that "Coal in place is a part of the                                  
            realty."  Primarily for that reason, the Court rejected the                                 
            Commissioner's argument that the coal in place was held by the                              
            taxpayer for sale to customers in the ordinary course of                                    
            business.  In the present case, similarly, the sand in question                             
            had not been mined or otherwise separated from the realty.  In                              
            addition, we have found that the parties to the sale did not                                
            intend to sell and buy sand as part of the transaction.                                     
                  Respondent contends that the instant case is like Clemente,                           
            Inc. v. Commissioner, T.C. Memo. 1985-367.  There, the taxpayer                             
            exchanged the right to extract gravel from one parcel of land                               
            (but did not exchange the land itself) for another parcel of                                
            land.  The issue before the Court was whether land and the right                            
            to extract gravel from land were of a like kind.  That case does                            







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