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properties had been identified within the 45-day identification
period. During the audit of their tax returns, petitioners'
accountant provided to respondent's revenue agent a copy of the
backdated letter that petitioner husband wrote to Mr. Clack
identifying the Pleasant Hill and Skyland properties. Mr. Fivey
sent the Pleasant Hill letter to the revenue agent. Pursuant to
a written plea agreement with the U.S. Department of Justice,
petitioner husband pleaded guilty to two counts of violating
section 7207 for causing the delivery of false documents to the
Internal Revenue Service (IRS).
Petitioners extended the period of limitations to assess and
collect tax for 1989 and 1990 to December 31, 1994, pursuant to
section 6501(c)(4). Respondent timely issued a notice of
deficiency for 1989 and issued a notice of deficiency for 1990 on
April 12, 1996.
OPINION
Generally a taxpayer must recognize the entire amount of
gain or loss on the sale or exchange of property. Sec. 1001(c).
Section 1031(a)(1) allows taxpayers to defer gain or loss from
exchanges of like-kind property held for business or investment
purposes, as distinguished from a cash sale of property followed
by a reinvestment of the proceeds in other property. Barker v.
Commissioner, 74 T.C. 555, 561 (1980). Section 1031(a)(3)
governs nonsimultaneous like-kind exchanges. To qualify as a
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