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Investments, Limited to pay for Hong Kong Restaurant, Inc. The
evidence does not support this claim.
To summarize, Ms. Ng proved an initial basis of $36,750 in the
stock of Hong Kong Restaurant, Inc. which was totally absorbed by
pass-through losses she claimed prior to 1986. She did not prove
any additional contributions to capital or shareholder loans.
Accordingly, we hold that the deductions claimed during the years
under consideration were properly disallowed.
Issue 3. Section 1031 Exchange
Ms. Ng deferred gain from the sale of her Larkin and Lombard
Street properties in San Francisco pursuant to section 1031. The
deferred gain from the sale of her Larkin Street property in 1988
was $393,177, and the deferred gain from the sale of her Lombard
Street property in 1989 was $516,633. Ms. Ng's sale of her Larkin
and Lombard Street properties was followed by Strong Hope's
conveyance of its one-half interest in an apartment building at 850
Stockton Street in San Francisco to Ms. Ng. Ms. Ng owned the other
half interest in the Stockton Street property. Respondent
determined that Ms. Ng was not entitled to the deferred gain on the
sale of these 2 properties on the ground that Ms. Ng did not intend
to exchange the properties for like-kind property, as required to
obtain deferral of gain under section 1031. The underlying facts
support respondent's assertions.
In July of 1988, Wing Lung Bank demanded that Ms. Ng satisfy
her delinquent bank loans. Ms. Ng advised the bank that she would
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