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relinquished the McDonald Street property to WLC--was the payment
received by petitioner from WLC the sale price of the McDonald
Street property at the December 29 closing, as respondent
determined? Or was it the deferred purchase price on
petitioner’s September 24 quitclaim transfer of title to the
unimproved Lawrence Drive property (which petitioner received
back on December 29 from WLC with the substantially completed
building that had been erected on it in the intervening 3
months), as petitioner reported?
Our approach to answering these questions is to determine
for tax purposes whether WLC became the owner of the Lawrence
Drive property during the 3-month period it held title to the
property while the building was being built on it to petitioner’s
specifications. If petitioner remained the owner of the Lawrence
Drive property during this period, petitioner could not engage in
a qualified like-kind exchange of the McDonald Street property
for the Lawrence Drive property, and the $142,400 payment
received by petitioner would be deemed the sale price of the
McDonald Street property. A taxpayer cannot engage in an
exchange with himself; an exchange ordinarily requires a
“reciprocal transfer of property, as distinguished from a
transfer of property for a money consideration”. Sec. 1.1002-
1(d), Income Tax Regs.
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