-26-
$25,000 payable to Ms. Ng. The 3 cashier's checks were treated as
follows:
$100,000--booked by Strong Hope Limited as a loan
from Ms. Ng.
$25,000--deposited into Strong Hope Limited's
account at Bank of America on May 25, 1989.
$25,000--deposited into Ms. Ng's personal account at
Bank of America on May 25, 1989.
* June 23, 1989--Check for $22,000 drawn on Strong Hope
Limited's account at Bank of America and deposited into Ms. Ng's
personal account at Bank of America.
Section 1001(c) requires recognition of gain or loss on the
sale or exchange of property. However, under section 1031(a),
nonrecognition is permitted if property held for productive use in
a trade or business or for investment is exchanged solely for like-
kind property also held for business or investment purposes.
Section 1031(a) assumes that the new property is substantially
a continuation of the old investment. See Commissioner v. P.G.
Lake, Inc., 356 U.S. 260, 268 (1958). A taxpayer must satisfy the
specific requirements and underlying purpose of section 1031(a) to
qualify for deferral of gain. Bolker v. Commissioner, 760 F.2d
1039, 1044 (9th Cir. 1985), affg. 81 T.C. 782 (1983). A
transaction will not be treated as an exchange if the taxpayer had
control over the sale proceeds. Coupe v. Commissioner, 52 T.C.
394, 409 (1969); see also Klein v. Commissioner, T.C. Memo. 1993-
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