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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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