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proceeds received from the sale of the five units towards the
purchase of qualifying replacement property located in Glendale,
Arizona, on January 31, 1991, and, therefore, is entitled to
nonrecognition of gain on the sale of the five units.
Section 1033(a), among other things, allows nonrecognition
of gain to the extent that proceeds received from the compulsory
or involuntary conversion of property are used to purchase other
property similar or related in service or use to the property so
converted (qualifying replacement property). Involuntary
conversions resulting from the destruction of property in whole
or in part are specifically enumerated as a type of disposition
that qualifies under the statute. Sec. 1033(a). “[C]onversions
or sales of property where the owner had a choice of keeping the
property or converting or selling it” do not qualify for
nonrecognition treatment. C.G. Willis, Inc. v. Commissioner,
41 T.C. 468, 474 (1964), affd. 342 F.2d 996 (3d Cir. 1965).
Therefore, petitioner must prove that, as a result of the
destruction of the five units in whole or in part, the five units
were involuntarily converted and that the purchase of property
located in Glendale, Arizona, on January 31, 1991, constituted
the purchase of qualifying replacement property.
In this case, petitioner has failed to prove that the five
units were destroyed in whole or in part as that phrase is used
in section 1033(a). At trial, petitioner offered only his
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