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Commissioner, 116 T.C. 450, 463-464 (2001). For example, carved-
out oil payments, although characterized as real property under
State law, were found not to be like kind to a fee interest in
real estate. Fleming v. Commissioner, supra at 823-824. See
also Wiechens v. United States, 228 F. Supp. 2d 1080, 1085 (D.
Ariz. 2002), where 50-year water rights were not like kind to a
fee interest in real estate, and Clemente, Inc. v. Commissioner,
T.C. Memo. 1985-367, where an 8-acre parcel of land was not like
kind to gravel extraction rights in another parcel of land.
To decide whether an exchange is like kind within the
meaning of section 1031(a), we must compare the exchanged
properties to ascertain whether the nature and character of the
transferred rights in and to the respective properties are
substantially alike. Koch v. Commissioner, supra at 64-65; sec.
1.1031(a)-1(b), Income Tax Regs. See generally the discussion in
Smalley v. Commissioner, supra at 461-464. We conclude that the
real property interest status under New Mexico law of the TEPCO
and WEF supply contracts is not determinative of whether those
supply contracts constitute like-kind property as opposed to boot
under section 1031. See Koch v. Commissioner, supra at 64-65.
In making this comparison, consideration is to be given to the
respective interests in the physical properties, the nature of
the title conveyed, the rights of the parties, the duration of
the interests, and any other factor bearing on the nature or
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