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Notice of Deficiency
In the notice of deficiency, respondent determined that
petitioners' like-kind exchange of properties in Wisconsin for
property in Tennessee did not qualify as a section 1031 nontaxable
exchange because the statutory time requirement for completion of
the exchange was not met. Accordingly, respondent determined that
petitioners had ordinary income of $16,266 and capital gain of
$82,288 for 1993 arising from this exchange.
OPINION
Petitioners contend that although they attempted to adhere to
the section 1031 requirements, an event beyond their control (i.e.,
the seller of one of the replacement properties--Campbellsville
Pike property--canceled the sale 1 day prior to the date set for
closing) prevented them from receiving the replacement property
within the prescribed 180-day period for receiving like-kind
property. Respondent argues that because petitioners received the
replacement property beyond the prescribed 180-day period,
petitioners' exchange does not qualify for the like-kind treatment;
and, as a consequence, petitioners must recognize as income the
gain attributable to the sale of the 99th Street and West Center
Street properties.
Section 1001 generally requires recognition of the entire
amount of gain or loss on the sale or exchange of property.
Section 1031(a)(1), however, provides for the nonrecognition of
such gain or loss on "the exchange of property held for productive
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