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I. Exchanges of Properties
In 1995, Teruya engaged in two separate real property
exchange transactions, referred to herein as the Ocean Vista
transaction and the Royal Towers transaction.
A. Ocean Vista Transaction
Teruya owned a fee simple interest in Ocean Vista, a parcel
of land underlying the Ocean Vista Condominium complex in
Honolulu, Hawaii. Teruya’s ownership interest in Ocean Vista was
subject to a long-term ground lease held by Golden Century
Investments Co. (Golden), which in turn was subject to a sublease
held by the Association of Apartment Owners of Ocean Vista (the
Association).
In March 1993, the Association inquired about buying
Teruya’s fee simple interest in Ocean Vista. Teruya responded
that its fee simple interest in Ocean Vista was not available.
Golden then proposed acquiring Ocean Vista as part of a like-kind
exchange. In a letter of intent agreement, dated August 16,
1993, Golden agreed to purchase, and Teruya agreed to sell,
Teruya’s interest in Ocean Vista for $1,468,500. An amendment to
the letter of intent, dated November 2, 1993, states: “It is
understood and agreed that Teruya’s obligation to sell Teruya’s
Interests to * * * [Golden] is conditioned upon Teruya
consummating a [section] 1031 tax deferred exchange of Teruya’s
interests.”
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Last modified: May 25, 2011