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sample letter was dated September 5, 1989, and addressed to
petitioner husband. Petitioners received this sample letter
before they expressed an interest in acquiring either Pleasant
Hill or Skyland to Mr. Clack.
In January 1990, petitioner husband also wrote a letter to
Mr. Clack which purported to identify five possible replacement
properties, including the Pleasant Hill and Skyland properties.
Petitioner husband backdated the letter to September 18, 1989,
the date of the Van Voorhis letter identifying potential
replacement property.
Petitioners reported the transfer of the Antioch property on
their 1990 tax return as a section 1031 exchange qualifying for
nonrecognition of gain and reported that they identified
replacement property on September 18, 1989. Respondent
determined that the transaction did not qualify as a section 1031
exchange because petitioners did not timely identify the
replacement property. Accordingly, respondent determined that
petitioners must report the gain realized on the Antioch
property.
Petitioners' accountant relied on the false letters
solicited by petitioner husband from Ms. Love and Mr. Fivey to
prepare petitioners' 1989 and 1990 tax returns. Petitioners
indicated to their accountant that they exchanged the Antioch
property pursuant to section 1031 and that the replacement
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