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AAL in obtaining a title policy and recording the deed through
‘their’ escrow agent are not relevant to the question of the date
when transfer of ownership was complete.” In fact, subsequent
steps taken by all concerned in 1993 and 1994, and not by AAL
alone, are very relevant to that question.
A transfer of property by deed in lieu of foreclosure
constitutes a “sale or exchange” for Federal income tax purposes.
Allan v. Commissioner, 86 T.C. 655, 659 (1986), affd. 856 F.2d
1169, 1172 (8th Cir. 1988). In a given case, the test to be
applied to determine whether a transaction is a closed one is a
practical test, and the transaction should be regarded in its
entirety. Clodfelter v. Commissioner, 426 F.2d 1391 (9th Cir.
1970), affg. 48 T.C. 694 (1967). Although other factors may be
considered, passage of title is usually conclusive. Id. An
exception is illustrated by our decision in Keith v.
Commissioner, 115 T.C. 605 (2000), discussed infra pp. 14-15.
It seems beyond dispute that the title to the Fitch Property
passed on May 27, 1994, when the Title Company was ready to issue
a title policy acceptable to AAL and could file the deed for
recordation, which it did on that date. Previously, AAL and the
Partnership had negotiated a settlement agreement in lieu of
foreclosure whereby the Partnership would convey the Fitch
Property to AAL as full settlement of the outstanding
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