Donald DeCleene and Doris DeCleene - Page 27

                                       - 27 -                                         

               The Tax Court held--and the Court of Appeals affirmed--that            
          the transaction was in effect the purchase of a new facility, and           
          not an exchange of unimproved property for improved property,               
          inasmuch as the taxpayer already owned the land on which the new            
          plant was constructed.  The contractor could not be a party to an           
          exchange with the taxpayer because the contractor was never the             
          owner of the property that the taxpayer received in the so-called           
          exchange.  The contractor was merely acting as a service provider           
          in the construction of the new plant.  The only real property to            
          which the contractor acquired title was the land and old plant              
          that it received as part payment for the construction services it           
               The subject transactions are similar to those in Bloomington           
          Coca-Cola Bottling Co. v. Commissioner, supra, in significant               
          respects.  The taxpayer sold its old bottling plant (petitioner             
          sold the McDonald Street property) to the only other party it was           
          dealing with, the contractor (WLC).  The taxpayer hired a                   
          contractor to build a new facility on land that it owned.  In the           
          case at hand, petitioner’s conveyance of title to the unimproved            
          Lawrence Drive property and the conveyance of that property back            
          with a substantially completed building on it are to be                     
          disregarded; WLC never acquired any of the benefits and burdens             
          of ownership of the Lawrence Drive property.  WLC acquired no               
          equity or beneficial interest in the Lawrence Drive property, no            

Page:  Previous  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  Next

Last modified: May 25, 2011