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argument that petitioners are estopped by the rule of consistency
from claiming that the section 1231 gain should be recognized for
tax purposes in 1993.
Petitioners essentially base their argument on (1) the fact
that the Grant Deed and the Covenant Not to Sue agreement are
dated December 15, 1993, and (2) the fact that AAL issued a 1993
Form 1099-A, showing the “date of lender’s acquisition” of the
Fitch Property to be “12-15-93”. Petitioners argue that all
subsequent actions were for the benefit of AAL, and of no further
concern to the Partnership.
Past decisions of this Court and California law, as applied
to the facts of this case, do not support petitioners’ argument
that the transaction was completed in 1993. The escrow
instructions, dated December 9, 1993, recite that they were being
issued to the Title Company on behalf of AAL and the Partnership.
The instructions were consented to by George H. Wells, signing as
a general partner of “Lowry & Wells Investments, a California
partnership.” Also, as noted above, the Grant Deed recited that
the Grantor and Grantee intend that the lien created by the Deed
of Trust would not merge into the fee title being acquired by the
Grantee. The Grant Deed further recites that no merger will
occur until the Grantee executes and records a separate
instrument specifically effecting such merger. These facts alone
repudiate petitioners’ contention that “The subsequent actions by
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