Teruya Brothers, Ltd. & Subsidiaries - Page 16

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          V.  Non-Tax-Avoidance Exception                                             
               Petitioner argues that Teruya’s continued investment in                
          like-kind properties meets the requirements of the non-tax-                 
          avoidance exception under section 1031(f)(2)(C), as subsumed                
          within section 1031(f)(4).  Section 1031(f)(2)(C) provides that             
          there shall not be taken into account any disposition “with                 
          respect to which it is established to the satisfaction of the               
          Secretary that neither the exchange nor such disposition had as             
          one of its principal purposes the avoidance of Federal income               
               With respect to both the Ocean Vista and Royal Towers                  
          transactions, petitioner contends that “there was no intent to              
          disguise an actual sale of the relinquished property in order to            
          reduce or avoid gain recognition on such sale, because a sale of            
          the relinquished property was not intended in the first place.”             
          In other words, petitioner contends that from the outset of both            
          transactions, Teruya intended to qualify for deferred like-kind             
          exchange treatment and did not intend to make direct sales of the           
          properties.  Petitioner points to the fact that Teruya, Times,              
          Golden, the Association, and Savio agreed in various documents              

               12 In other contexts involving similar language, we have               
          applied a “strong proof” standard.  See, e.g., Schoneberger v.              
          Commissioner, 74 T.C. 1016, 1024 (1980).  Because it makes no               
          difference to the outcome of this case, we do not apply any                 
          heightened standard of proof.                                               

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