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investment which remains unliquidated. Commissioner v. P.G.
Lake, Inc., 356 U.S. at 268.
In determining whether the like-kind requirement of section
1031 had been met, we found it significant in Koch v.
Commissioner, 71 T.C. at 65, that section 1031(a) refers to
property of a like, not an identical, kind. The required
comparison of the old and new exchanged properties, we reasoned,
should be directed to whether the taxpayer, in making the
exchange, has used its property to acquire a new kind of asset or
has merely exchanged its property for an asset of like nature or
character. Id. Examining the exchanged properties in Koch with
those principles in mind, we held the taxpayer’s exchange of fee
simple land for other fee simple land subject to 99-year
condominium leases qualified for nonrecognition treatment under
section 1031(a) because those exchanged properties were property
of a like kind. Id. at 65-70.
In Koch, we rejected the Commissioner’s contention that the
taxpayer/lessor’s interests (primarily the right to condominium
rental payments) could be separated from the taxpayer’s fee
simple interest in that land. We observed that: (1) The
taxpayer’s right to rent was not a separate and distinct item of
property but part of the bundle of rights incident to ownership
of the fee; (2) the bundle of rights and its related obligations
were inextricably bound up with the fee simple interest; (3) the
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