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day exchange period include: (1) The agreement that petitioner
and Rayonier entered into on November 29, 1994, expressly made
the transaction conditioned on “reasonable cooperation and a tax
free exchange qualifying under Section 1031”; (2) petitioner used
a qualified escrow account and a proper escrow agent as required
by section 1.1031(k)-1(g)(3), Income Tax Regs.; (3) petitioner
identified and received the replacement properties within the 45-
day and 180-day periods as required by section 1031(a)(3); (4)
petitioner testified credibly that he intended to have a like-
kind exchange; and (5) in planning the transaction, petitioner
relied on advice from a well-known timber taxation expert and
from his long-time accountant. Moreover, as previously
mentioned, respondent has determined no negligence or accuracy-
related penalty in regard to the subject transaction.
F. Conclusion
In light of all the facts and circumstances, we conclude and
hold that petitioners have satisfied the bona fide intent test
and that under section 1.1031(k)-1(j), Income Tax Regs.,
petitioners had no actual or constructive receipt of property in
1994 for purposes of applying the installment sale provisions of
section 453. We conclude and hold that petitioners recognized no
gain from the subject transaction in 1994 and that respondent’s
determination was in error.
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