D. G. Smalley and Nell R. Smalley - Page 9




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          necessarily had to have land attached.  Petitioners argue that              
          under applicable Georgia law, both the relinquished property and            
          the replacement property are characterized as real property                 
          interests, and that under Commissioner v. Crichton, 122 F.2d 181            
          (5th Cir. 1941), affg. 42 B.T.A. 490 (1940), the subject                    
          transaction qualifies as a tax-deferred like-kind exchange within           
          the meaning of section 1031.                                                
              Respondent argues that under Georgia law, the 2-year timber            
          cutting contract was personal property and thus not of like kind            
          to the replacement real property.  In addition, relying on Oregon           
          Lumber Co. v. Commissioner, 20 T.C. 192 (1953), respondent argues           
          that regardless of how the property interests may be                        
          characterized under State law, the property relinquished and the            
          properties received differ so intrinsically that they are not of            
          like kind within the meaning of section 1031.3                              
               2.  Petitioners’ Alternative Argument:  Lack of Actual or              
               Constructive Receipt in 1994                                           
               On brief, petitioners raise an alternative argument that               
          regardless of whether the subject transaction qualifies as a                


               3 Respondent does not dispute that petitioners have met all            
          other requirements for a nontaxable exchange of property held for           
          productive use in a trade or business or for investment within              
          the meaning of sec. 1031.  In particular, respondent does not               
          dispute that petitioner’s transaction with Rayonier constituted             
          an “exchange” within the meaning of sec. 1031 or that petitioners           
          have satisfied the requirements of sec. 1031(a)(3), which in the            
          case of a nonsimultaneous exchange generally requires that the              
          replacement property be identified no more than 45 days after,              
          and the exchange be completed no more than 180 days after, the              
          transfer of the relinquished property.                                      




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