D. G. Smalley and Nell R. Smalley - Page 17





                                       - 17 -                                         
               Accordingly, we turn to consideration of that issue.                   
          D.  Bona Fide Intent Test                                                   
               Section 1.1031(k)-1(j)(2)(iv), Income Tax Regs., provides:             
                    Bona fide intent requirement.  The provisions of                  
               paragraphs (j)(2)(i) and (ii) of this section [which                   
               coordinate gain recognition rules under sections 453                   
               and 1031 with respect to a deferred exchange involving                 
               a qualified escrow account, qualified trust, or                        
               qualified intermediary] do not apply unless the                        
               taxpayer has a bona fide intent to enter into a                        
               deferred exchange at the beginning of the exchange                     
               period.  A taxpayer will be treated as having a bona                   
               fide intent only if it is reasonable to believe, based                 
               on all the facts and circumstances as of the beginning                 
               of the exchange period, that like-kind replacement                     
               property will be acquired before the end of the                        
               exchange period.                                                       
               In arguing that petitioner lacked the requisite bona fide              
          intent, respondent takes issue only with whether it was                     
          reasonable for petitioner to believe that the property he                   
          relinquished and the properties he received in the subject                  
          transaction were of like kind within the meaning of section 1031.           
          Respondent does not contend that petitioner otherwise failed to             
          satisfy the requirements of section 1.1031(k)-1(j)(2)(iv), Income           


               6(...continued)                                                        
                    equivalent held in the escrow account as provided in              
                    paragraph (g)(6) of this section.                                 
               Furthermore, respondent has not contended that the subject             
          transaction fails to meet any of the conditions for application             
          of sec. 453, other than as relate to the satisfaction of the bona           
          fide intent requirement of sec. 1.1031(k)-1(j)(2)(iv), Income Tax           
          Regs.                                                                       






Page:  Previous  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  Next

Last modified: May 25, 2011