Chad A. and Katherine J. Lincoln - Page 9

                                        - 9 -                                         

               At trial and on brief, petitioners cite Starker v. United              
          States, 602 F.2d 1341 (9th Cir. 1979), as their underlying                  
          authority for section 1031 exchange treatment.  Their reliance is           
          misplaced.  In Starker, the taxpayer transferred timberland to a            
          corporation which, within a previously agreed period, transferred           
          to the taxpayer various parcels of land and certain contract                
          rights.  In Starker, unlike the instant case, no cash was ever              
          transferred.  Starker held, in relevant part, that the                      
          nonsimultaneous transfers of property did not preclude section              
          1031 treatment.1  Starker does not, however, dispense with the              
          requirement that there in fact be an exchange of property.  As              
          previously discussed, petitioners have failed to cross that                 
          initial threshold.                                                          
               Accordingly, we sustain respondent’s determination that                
          petitioners have failed to meet the requirements for a section              
          1031 exchange.                                                              

          Interest Expenses and Taxes                                                 
               On Schedule E of their 1993 joint Federal income tax return,           
          in computing a claimed loss from rental real estate, petitioners            

               1  Subsequent to the decision in Starker v. United States,             
          602 F.2d 1341 (9th Cir. 1979), Congress amended sec. 1031(a) to             
          impose certain time limitations on the completion of a                      
          nonsimultaneous exchange.  See sec. 1031(a)(3), as enacted by the           
          Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 77(a), 98               
          Stat. 596.  Respondent has not raised, and we do not reach, the             
          issue of whether petitioners have satisfied those statutory                 

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

Last modified: May 25, 2011