- 13 -
cost of the signs, who paid for them, or when those payments were
made. We conclude that petitioners may not increase the basis in
the Hoefgen Avenue property based on the future contract value of
the two outdoor signs.
C. Whether the Babcock Road and Warfield Drive Properties
Qualify as Replacement Property for the Hoefgen Avenue
Property Under Section 1033
1. Background and Contentions of the Parties
A taxpayer who sells under threat of condemnation real
property held for business use or investment may defer
recognition of the gain if he or she buys property of like kind
to the converted property within 3 years after the closing of the
first taxable year in which any part of the gain from the sale is
realized. See sec. 1033(a)(1), (g)(1), and (g)(4). Principles
used for deciding whether an exchange is like kind under section
1031 also apply in deciding whether replacement property is
property of a like kind under section 1033. See sec. 1.1033(g)-
1(a), Income Tax Regs. An exchange of a fee interest in real
property for an interest in a partnership does not qualify as an
exchange of like-kind property. See M.H.S. Co. v. Commissioner,
T.C. Memo. 1976-165, affd. 575 F.2d 1177 (6th Cir. 1978); sec.
1.1031(a)-1(b), Income Tax Regs.
4(...continued)
Inc. v. United States, 444 F.2d 677, 683-684 (5th Cir. 1971).
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011