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In arguing that the properties are of like kind, petitioners
rely in part on Commissioner v. Crichton, 122 F.2d 181 (5th Cir.
1941), which held that an undivided fractional interest in
mineral rights on unimproved country land was of like kind to
undivided interests in improved city lots. Petitioners cite
Crichton for the proposition that section 1031 is to be liberally
construed to effect legislative intent and that the only
distinction that would justify disqualification must be “the
broad one between classes and characters of properties, for
instance, between real and personal property.” Id. at 182; see
also sec. 1.1031(a)-1, Income Tax Regs.9 Petitioners argue that
9 In pertinent part, sec. 1.1031(a)-1, Income Tax Regs.,
provides as follows:
(b) Definition of “like kind.” As used
in section 1031(a), the words “like kind”
have reference to the nature or character of
the property and not to its grade or quality.
One kind or class of property may not, under
that section, be exchanged for property of a
different kind or class. The fact that any
real estate involved is improved or
unimproved is not material, for that fact
relates only to the grade or quality of the
property and not to its kind or class.
Unproductive real estate held by one other
than a dealer for future use or future
realization of the increment in value is held
for investment and not primarily for sale.
* * *
(c) Examples of exchanges of property of
a “like kind.” No gain or loss is recognized
if * * *
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