- 20 -
recourse to general principles of tax law to answer the question
posed by repondent’s determination.
Analysis and Conclusion
In the case at hand, petitioner did not just locate and
identify the Lawrence Drive property in anticipation of acquiring
it as replacement property in exchange for the McDonald Street
property that he intended to relinquish. He purchased the
Lawrence Drive property without the participation of an exchange
facilitator a year or more before he was ready to relinquish the
McDonald Street property and relocate his business to the
Lawrence Drive property. In the following year, petitioner
transferred title to the Lawrence Drive property, subject to a
reacquisition agreement--the Exchange Agreement--not to a third-
party exchange facilitator, but to WLC, the party to which he
simultaneously obligated himself to relinquish the McDonald
Street property.
In forgoing the use of a third party and doing all the
transfers with WLC, petitioner and his advisers created an
inherently ambiguous situation. The ambiguity is exacerbated by
the fact that petitioner and WLC agreed in the Exchange Agreement
that the McDonald Street property and the unimproved Lawrence
Drive property were of equal value, $142,400. So when WLC paid
petitioner $142,400--at the same time that he permanently
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011