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treatment, provided generally that the taxpayer identifies the
new property within 45 days and receives it within 180 days of
transferring the old property. See sec. 1031(a)(3). To
facilitate such a deferred exchange, the taxpayer may use a
qualified intermediary; i.e., a person who is not the taxpayer,
an agent of the taxpayer, a related person to the taxpayer, or a
related person to an agent of the taxpayer, see sec. 1.1031(k)-
1(k), Income Tax Regs., who enters into a written exchange
agreement with the taxpayer and, as required by this agreement,
acquires property from the taxpayer, transfers this property,
acquires like-kind replacement property, and transfers this
replacement property to the taxpayer. Sec. 1.1031(k)-
1(g)(4)(iii), Income Tax Regs.
Teruya used a qualified intermediary, TGE, to facilitate its
transfers of Ocean Vista and Royal Towers and its acquisitions of
Kupuohi II, Kupuohi I, and Kaahumanu. Respondent does not
dispute that these transactions meet the general requirements for
like-kind exchanges under section 1031(a)(1). Respondent
contends, however, that section 1031(f) requires petitioner to
recognize gains on the transactions.
II. Rules Applicable to Related-Person Exchanges
Section 1031(f)(1) provides generally that if a taxpayer and
a related person exchange like-kind property and within 2 years
either one disposes of the exchanged property, the nonrecognition
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Last modified: May 25, 2011