Teruya Brothers, Ltd. & Subsidiaries - Page 2

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               Jonathan H. Steiner, William E. Bonano, and Stanley Y.                 
          Mukai, for petitioner.                                                      
               Jonathan J. Ono, for respondent.                                       

               THORNTON, Judge:  Respondent determined a $4,144,359                   
          deficiency in petitioner’s Federal income tax for its taxable               
          year ending March 31, 1996.  The issue for decision is whether              
          petitioner is entitled to defer gains realized on certain like-             
          kind exchanges under section 1031(a) or must recognize gains                
          under section 1031(f), which provides special rules governing               
          exchanges between related persons.1                                         
               This case is before us fully stipulated pursuant to Rule               
          122.  We incorporate herein the stipulated facts.  When                     
          petitioner filed its petition, its principal place of business              
          was in Honolulu, Hawaii.                                                    
               Teruya Brothers, Ltd. (Teruya), is a Hawaii corporation.               
          Its business activities include purchasing and developing                   
          residential and commercial real property.  During the taxable               
          year in issue, Teruya owned 62.5 percent of the common shares of            
          Times Super Market, Ltd. (Times).                                           

               1 Section references are to the Internal Revenue Code in               
          effect for the taxable year in issue and as amended.  Rule                  
          references are to the Tax Court Rules of Practice and Procedure.            

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