Chad A. and Katherine J. Lincoln - Page 7

                                        - 7 -                                         

          purchase of one liquor store and their subsequent sale of another           
          constituted two independent events, rather than a section 1031              
               Petitioners contend that they never would have sold the                
          Pacific Grove property except for their need to generate funds to           
          improve the Big Sur property, and that hence the two transactions           
          were interdependent.  We question the premises and disagree with            
          the conclusion.  While petitioners may have viewed the sale of              
          the Pacific Grove property as a source of revenue to finance                
          construction on the Big Sur property, a year prior to the sale of           
          the Pacific Grove property they were able to borrow against their           
          personal line of credit to make a cash downpayment on the Big Sur           
          property.  Moreover, they began construction on the Big Sur                 
          property 9 months prior to the Pacific Grove sale.  In any event,           
          neither the petitioners’ financial motivation for selling the               
          Pacific Grove property nor their application of the sales                   
          proceeds operates to transform the independent purchase and sale            
          transactions into an exchange.  See Anderson v. Commissioner,               
          T.C. Memo. 1985-205.                                                        
               Likewise, it is of no material significance that the Elvins            
          agreed that the money consideration for their purchase of the               
          Pacific Grove property should be deposited into petitioners’                
          Provident Central Credit Union account.  Indeed, it is difficult            
          to imagine what difference it could have made to the Elvins.                

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011