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affd. in part and revd. in part 241 F.2d 78 (5th Cir. 1957),
affd. sub nom. Commissioner v. P.G. Lake, Inc., 356 U.S. 260
(1958)). Respondent contends that the supply contracts
constitute property of a different kind and class and are not
like-kind property to the gold mining property Peabody
transferred, because the contracts are of an intrinsically
different nature and character from gold mining property. See
sec. 1.1031(a)-1(b), Income Tax Regs.
Finally, respondent argues that Koch is distinguishable from
and inapplicable to this case because the condominium leases in
Koch were 99-year (long-term) land leases, whereas the coal
supply contracts we consider are only interests in coal to be
removed from the ground.8 Respondent also attempts to
distinguish Koch, where condominium leaseholders had the primary
right directly to use the land, from this case, where the coal
buyers have no direct and substantially similar right to use the
Lee Ranch mine land.
C. Analysis
We agree with respondent that exchanges of real property
interests are not, ipso facto, like-kind exchanges under section
1031. Koch v. Commissioner, supra at 64-65; see also Smalley v.
8We note that respondent does not carry this reasoning into
the question of whether the Lee Ranch mine (land in fee and coal
leases) is like-kind property to the two gold mine properties
received in exchange.
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