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property for another property that is materially different either
in kind or in extent. Sec. 1.1001-1, Income Tax Regs.
The key to deciding whether there has been a sale for
Federal income tax purposes is whether the benefits and burdens
of ownership have passed. Highland Farms, Inc. v. Commissioner,
106 T.C. 237 (1996); Grodt & McKay Realty, Inc. v. Commissioner,
77 T.C. 1221, 1237 (1981). Among the many factors we may
consider in deciding whether there has been a sale are the
following: Whether legal title passes; how the parties treat the
transaction; whether an equity was acquired in the property;
whether the contract creates a present obligation on the seller
to execute and deliver a deed and a present obligation on the
purchaser to make payments; whether the right of possession is
vested in the purchaser; which party pays the property taxes;
which party bears the risk of loss or damage to the property; and
which party receives the profits from the operation and sale of
the property. Levy v. Commissioner, 91 T.C. 838, 860 (1988);
Grodt & McKay v. Commissioner, supra at 1237-1238.
Cases addressing whether there has been a sale or exchange
of a capital asset often combine the issue of whether the
taxpayer owned a capital asset with the issue of whether the
taxpayer sold the asset. For example, in Erickson v.
Commissioner, T.C. Memo. 1992-585, affd. 1 F.3d 1231 (1st Cir.
1993), we concluded that there was no sale of the taxpayer’s
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