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replacement property chosen by petitioners. Petitioners paid a
portion of the interest earned on the sale proceeds to Clack
Bros. as a fee and retained the remainder of the sale proceeds
interest.
The exchange agreement provided that petitioners would be
entitled to the sales proceeds if they did not identify
replacement property within 45 days of the transfer of the
Antioch property. If petitioners did identify replacement
property, they would have a right to the sales proceeds if they
did not acquire replacement property within 180 days of the
transfer, pursuant to the exchange agreement. A letter attached
to the exchange agreement also informed petitioners of the 45-day
identification period. The 45th day after the transfer was
October 6, 1989, and the 180th day was in February 1990.
Petitioners began looking for replacement property in 1988.
They considered numerous potential replacement properties and met
with several real estate agents. In connection with the
properties they considered, petitioners examined various
information about the properties, such as building plans, income
and expense statements, tenant lists, leases, rents, service and
maintenance contracts on the property, and warranties, in order
to analyze the investment opportunity of the properties.
Petitioners expressed an interest in a number of replacement
properties during the identification period. They offered to
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