- 7 -
1031, but they did not so advise Mr. Riggs, petitioners' return
preparer, until he was asked to prepare petitioners' consolidated
return for the taxable year ended February 28, 1991.
Interstate paid the $470,000 purchase price for OIP's lots
11 and 12 by accepting OIP's assignment to it of OIP's $146,374
note and delivering funds equal to the balance of the $470,000
purchase price, i.e., $323,626, to The Bank of Winter Park (Bank)
in its capacity as the escrow agent under an agreement entitled
"EXCHANGE ESCROW SECURITY AGREEMENT" (escrow agreement). Xway
paid the $700,000 purchase price for OIP's 25-percent interests
in lots 14 and 15 by delivering funds in that amount to the Bank
in its capacity as the escrow agent under the escrow agreement.
The escrow agreement was entered into on July 26, 1990,
among Interstate as the buyer of OIP's lots 11 and 12 and OIP's
25-percent interests in lots 14 and 15,4 OIP as the seller there-
of, and the Bank as the escrow agent. The escrow agreement
provided in pertinent part:
WHEREAS, pursuant to that certain Contract for
Sale and Purchase by and between Exchangor [OIP], as
Seller, and Buyer [Interstate], dated the 26 day of
July, 1990 (the "Contract"), Exchangor agreed to ex-
change or sell certain real property [OIP's lots 11 and
12 and OIP's 25-percent interests in lots 14 and 15]
* * * (hereinafter referred to as the "Property"); and
WHEREAS, pursuant to the terms of the Contract,
Buyer has agreed to cooperate with Exchangor in effect-
ing a "like kind exchange" pursuant to the provisions
4Xway decided to use the name Interstate when it entered
into the escrow agreement. See supra note 2.
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