Donald DeCleene and Doris DeCleene - Page 2

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               liability for them at the second closing, when WLC paid                
               P the cash consideration of $142,400.                                  

                    Held:  The subject transactions were a sale of M                  
               Street to WLC for $142,400, as determined by R, rather                 
               than a sale of unimproved L Street, followed by a                      
               reverse like-kind exchange of M Street for improved L                  
               Street under sec. 1031(a), I.R.C., as reported by P.                   
               Because P never divested himself of beneficial                         
               ownership of L Street, P could not acquire improved L                  
               Street as replacement property in exchange for his                     
               relinquishment of M Street to WLC.  Held, further, P is                
               not liable for the accuracy-related penalty under sec.                 
               6662(a), I.R.C.                                                        

               Brian R. Mudd, for petitioners.                                        
               Michael J. Calabrese, for respondent.                                  

               BEGHE, Judge:  Respondent determined for the taxable year              
          1993 that petitioners had a Federal income tax deficiency of                
          $23,796 and were liable for a section 6662(a)1 accuracy-related             
          penalty of $4,759.                                                          
               The sole substantive issue for decision is whether the                 
          subject transactions qualified as a taxable sale of the Lawrence            
          Drive property and a like-kind section 1031(a)(1) exchange of the           
          McDonald Street property, as petitioners reported them, or was a            
          taxable sale of the McDonald Street property, as respondent                 

          1 Unless otherwise indicated, all section references are to                 
          the Internal Revenue Code in effect for the years in issue, and             
          all Rule references are to the Tax Court Rules of Practice and              

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