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