Donald DeCleene and Doris DeCleene - Page 1


                                   115 T.C. No. 34                                    

                               UNITED STATES TAX COURT                                

                  DONALD DECLEENE AND DORIS DECLEENE, Petitioners                     
                   v. COMMISSIONER OF INTERNAL REVENUE, Respondent                    

               Docket No. 24459-97.                Filed November 17, 2000.           

                    P had operated his business on the M Street                       
               property since 1977.  In 1992, P purchased the                         
               unimproved L Drive property as replacement property.                   
               In September 1993, P and WLC, who wished to acquire M                  
               Street, agreed that M Street and unimproved L Drive                    
               were of equal value, $142,400; P quitclaimed title to L                
               Drive to WLC for a deferred cash consideration of                      
               $142,400, to be paid at a second closing; WLC agreed to                
               build a building on L Drive to P’s specifications and                  
               in December 1993 to reconvey L Drive to P, with the                    
               substantially completed building on it, in exchange for                
               M Street.  These transactions closed as agreed.  While                 
               WLC held title to L Drive, P retained beneficial                       
               ownership thereof and was responsible for all                          
               transaction costs and carrying charges.  Construction                  
               was financed by a note and mortgage guaranteed by P                    
               that were nonrecourse as to WLC, and P assumed personal                

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