Chad A. and Katherine J. Lincoln - Page 5

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          54, 63 (1978).  Eligibility for this treatment is circumscribed             
          by a number of specific statutory requirements.  For purposes of            
          this case, we need be concerned only with the threshold                     
          requirement that there be an “exchange” of property.  We hold               
          that petitioners’ transactions did not constitute an exchange.              
               An exchange ordinarily requires a “reciprocal transfer of              
          property, as distinguished from a transfer of property for a                
          money consideration only”.  Sec. 1.1002-1(d), Income Tax Regs.  A           
          sale for cash does not constitute an exchange even though the               
          cash is immediately reinvested in like property.  Coastal                   
          Terminals, Inc. v. United States, supra at 337; see also Bell               
          Lines, Inc. v. United States, 480 F.2d 710, 714 (4th Cir. 1973);            
          Carlton v. United States, 385 F.2d 238, 242 (5th Cir. 1967);                
          Rogers v. Commissioner, 44 T.C. 126, 136 (1965), affd. per curiam           
          377 F.2d 534 (9th Cir. 1967).                                               
               Petitioners purchased the Big Sur property from Marcia                 
          D’Esopo with a cash downpayment and assumed a note for the                  
          balance of the purchase price.  Almost a year later, they sold              
          the Pacific Grove property to the Elvins and received cash.                 
          Although petitioners may have intended to effect a section 1031             
          exchange, there is no evidence that either Marcia D’Esopo or the            
          Elvins agreed to participate in an exchange of property.  Indeed,           
          petitioner husband testified at trial that it was only after                
          receiving an offer on the Pacific Grove property -- almost a year           

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