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the 23d Street property. Mr. Johnson relocated to the Lancaster
Auto Mall immediately upon vacating the 23d Street property.
Petitioners' 1992 Tax Returns
Petitioners filed a Form 4868, 1992 Application for
Automatic Extension of Time to File U.S. Individual Income Tax
Return. On April 15, 1993, respondent received the Form 4868.
On August 13, 1993, petitioners filed their 1992 tax return.
OPINION
I. Section 1033
As a general rule, gain realized from the sale or other
disposition of property must be recognized. Sec. 1001(c).
Section 1033 provides an exception to this rule. If property, as
a result of condemnation or threat or imminence thereof, is
compulsorily or involuntarily converted into money, no gain shall
be recognized if (1) the taxpayer elects nonrecognition
treatment, (2) the taxpayer purchases property similar or related
in service or use to the property converted within the statutory
time limit, and (3) the cost of the replacement property equals
or exceeds the amount realized on the conversion. Sec. 1033(a).
Section 1033 is a relief provision enacted to allow a
taxpayer to replace property involuntarily converted without
recognizing any gain resulting from that conversion. John
Richard Corp. v. Commissioner, 46 T.C. 41, 44 (1966). As a
relief provision, this section is construed liberally to achieve
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