Teruya Brothers, Ltd. & Subsidiaries - Page 19

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               In sum, petitioner has failed to persuade us that avoidance            
          of Federal income tax was not one of the principal purposes of              
          the Ocean Vista and Royal Towers transactions.                              
          VI.  Conclusion                                                             
               Petitioner offers no explanation for Teruya’s use of the               
          qualified intermediary in the Ocean Vista and Royal Towers                  
          transactions.  We infer that the qualified intermediary was                 
          interposed in an attempt to circumvent the section 1031(f)(1)               
          limitations that would have applied to exchanges directly between           
          related persons.  Petitioner has failed to show that avoidance of           
          Federal income tax was not one of the principal purposes of the             
          Ocean Vista and Royal Towers transactions.  We conclude that                
          these transactions were structured to avoid the purposes of                 
          section 1031(f).  Consequently, petitioner is not entitled, under           






















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