Donald DeCleene and Doris DeCleene - Page 24

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          soon as the facility to be built thereon to his specifications              
          was substantially completed.                                                
               The reconveyance to petitioner of the Lawrence Drive                   
          property was not part of an exchange by petitioner of the                   
          McDonald Street property.  That reconveyance of the Lawrence                
          Drive property to petitioner merely reunited in his hands the               
          bare legal title to the Lawrence Drive property with the                    
          beneficial ownership therein that he had continued to hold all              
          along while the building that he obligated himself to pay for was           
          being built to his specifications.                                          
               In support of their claim that petitioner exchanged the                
          McDonald Street property for the improved Lawrence Drive                    
          property, petitioners point out that the improved Lawrence Drive            
          property was different from the unimproved Lawrence Drive                   
          property that he acquired in 1992 and whose title he transferred            
          to WLC on September 24, 1993.  Petitioners state:  “Petitioners             
          sold unimproved land (and reported the transaction) and in the              
          exchange got back improved real estate they could continue their            
          business operation in.”  It’s true that unimproved property and             
          improved property are different from each other; they are not               
          “similar or related in service or use” for the purpose of the               
          section 1033 rollover provision.  See sec. 1.1033(a)-2(c)(9),               
          Income Tax Regs.  However, the transformation of the Lawrence               

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Last modified: May 25, 2011