Big Hong Ng - Page 27

          491. A transaction also will not qualify under section 1031 if the          
          person with whom the taxpayer made the exchange was acting as the           
          taxpayer's agent.  Coupe, 52 T.C. at 406.                                   
               Ms. Ng's transactions did not meet the specific requirements           
          or the underlying purpose of section 1031.  She appropriated the            
          proceeds from the sale of the Larkin Street and Lombard Street              
          properties for her own use immediately after the money was                  
          deposited into Strong Hope's bank account, which Ms. Ng treated as          
          her own.  We do not believe she ever intended to pay the $310,000           
          promissory note she gave as part of the purchase price.  Strong             
          Hope acted as Ms. Ng's agent when it deeded the Stockton Street             
          property directly to Ms. Ng, contrary to the original agreement of          
          the parties.  Furthermore, Ms. Ng never intended to exchange her            
          Larkin Street and Lombard Street properties for property of like            
          kind.  She sold those properties because she needed the proceeds to         
          satisfy her delinquent loans with Wing Lung Bank.                           
               We conclude that Ms. Ng did not satisfy the requirements or            
          underlying purpose of section 1031 and accordingly hold that she is         
          liable for gain on the sale of the Larkin Street and Lombard Street         
          Issue 4.  Strong Hope Liquidation                                           
               The next issue we consider relates to the tax consequences of          
          Strong Hope's transfer of its interest in the Stockton Street               
          property to Ms. Ng.  Respondent determined that Strong Hope made a          
          liquidating distribution to Ms. Ng when it transferred the Stockton         

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