William T. Shipes, Jr. and Kathy D. Shipes - Page 6

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          ended on December 31, 1993, and pertained to the additional                 
          conversion proceeds that Mr. Shipes received on February 18,                
               Respondent disagrees with petitioners' multiple replacement            
          period argument and maintains that section 1033 only authorizes             
          the use of a single replacement period, a period that, in this              
          case, ended on December 31, 1988.  We agree with respondent.                
               Nothing in the Code or the regulations authorizes the use of           
          multiple replacement periods as maintained by petitioners.                  
          Similarly, the case law precludes the use of multiple replacement           
          periods as well.  Two of the three cases cited by petitioners do            
          not involve the application of section 1033 and lend no support             
          to our analysis of the instant case.3  The final case cited by              
          petitioners, Conlorez Corp. v. Commissioner, 51 T.C. 467 (1968),            
          is inconsistent with their argument.4                                       

               3Neither Patrick McGuirl, Inc. v. Commissioner, 74 F.2d 729            
          (2d Cir. 1935), nor Covered Wagon, Inc. v. Commissioner, 369 F.2d           
          629 (8th Cir. 1966) involves sec. 1033.  Therefore, neither                 
          supports petitioners' argument.                                             
               4The facts of the instant case are indistinguishable from              
          the facts of Conlorez Corp. v. Commissioner, 51 T.C. 467 (1968).            
          The taxpayer in the Conlorez case had property that was condemned           
          by the government.  Shortly thereafter, the government paid the             
          taxpayer an amount that exceeded that taxpayer's basis in the               
          condemned property.  Sometime later, more than 2 years following            
          the close of the taxable year during which the government paid              
          the taxpayer the above-mentioned amount, a court awarded the                
          taxpayer an additional amount which the taxpayer subsequently               
          used to replace the condemned property.  This Court held that,              
          because the taxpayer realized gain in the taxable year that it              
          received the first payment, and because the purported replacement           

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