Michael H. Johnson and Patricia E. Johnson - Page 12

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          its purpose.  Filippini v. United States, 318 F.2d 841, 844 (9th            
          Cir. 1963); John Richard Corp. v. Commissioner, supra at 44.                
               Respondent concedes that (1) petitioners have made the                 
          election, (2) petitioners purchased 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 equaled            
          or exceeded the amount realized on the conversion.  The only                
          issue is whether Lancaster made a "threat of condemnation"                  
          regarding the 23d Street property.                                          
               A "threat of condemnation" exists if (1) the body                      
          threatening condemnation possesses the power of eminent domain,             
          (2) the property owner is told by an official of the threatening            
          body that condemnation will be sought unless the owner negotiates           
          a sale or exchange of the property, and (3) the information                 
          conveyed to the owner gives the owner reasonable grounds to                 
          believe that the threat was authorized and likely to be carried             
          out unless a sale or exchange is arranged.  Tecumseh Corrugated             
          Box Co. v. Commissioner, 94 T.C. 360, 376-377 (1990), affd. 932             
          F.2d 526 (6th Cir. 1991); Maixner v. Commissioner, 33 T.C. 191,             
          195 (1959); Dominguez Estate Co. v. Commissioner, T.C. Memo.                
          1963-112; Carson Estate Co. v. Commissioner, T.C. Memo. 1963-90.            
               The existence of a threat of condemnation is judged from the           
          seller's perspective taking into account all facts known at the             
          time of sale.  Tecumseh Corrugated Box Co. v. Commissioner,                 





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