Chad A. and Katherine J. Lincoln - Page 6

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          after buying the Big Sur property -- that he began investigating            
          the possibility of effecting a section 1031 exchange.  In these             
          circumstances, we believe it is abundantly clear that                       
          petitioners’ purchase of the Big Sur property and their                     
          subsequent sale of the Pacific Grove property constituted two               
          separate transfers of property for money consideration, rather              
          than an exchange.                                                           
               In a case with facts that are not favorably distinguishable            
          for petitioners, the court to which an appeal of this case would            
          lie reached a similar conclusion.  In Bezdjian v. Commissioner,             
          845 F.2d 217 (9th Cir. 1988), affg. T.C. Memo. 1987-140, the                
          taxpayers wished to exchange a rental property they owned for a             
          gas station.  The gas station owner, however, declined to                   
          participate in an exchange.  The taxpayers purchased the gas                
          station using proceeds of a loan secured in part by a deed of               
          trust on their rental property.  About 3 weeks later, the                   
          taxpayers sold the rental property to a third party.  The court             
          held that there was no exchange within the meaning of section               
          1031, because the taxpayers simply acquired one parcel of real              
          property from one party and sold another parcel to a different              
          party; although the taxpayers may have intended to make an                  
          exchange, there was no evidence that either of the other parties            
          agreed to participate in an exchange.  See also Dibsy v.                    
          Commissioner, T.C. Memo. 1995-477 (holding that the taxpayers’              

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