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condominium leases contained numerous provisions (some of which
we briefly summarized in our findings in Koch) not only securing
the payment of rent but also protecting the value of the
taxpayer’s reversionary interest; and (4) the right to rent was
merely an incident of ownership of the fee simple interest. Id.
at 66-68. We also acknowledged that the 99-year condominium
leases prevented the taxpayer from taking physical possession of
the land received and using it for other purposes. We viewed
that leasehold restriction on the taxpayer’s use of the new land
as a distinction in the grade or quality of the exchanged old and
new properties as opposed to a difference in their kind or class.
We observed that section 1031(a) “‘was not intended to draw any
distinction between parcels of real property however dissimilar
they may be in location, in attributes, and in capacities for
profitable use.’” Koch v. Commissioner, 71 T.C. at 68 (quoting
Commissioner v. Crichton, 122 F.2d at 182).12 Finally, in Koch
v. Commissioner, supra at 70, we held that the value of the
taxpayer’s condominium lease interests did not constitute taxable
12Sec. 1.1031(a)-1(b), Income Tax Regs., contains the
explanation that the “like-kind” requirement concerns the nature
or character of property and not its grade or quality. As we
observed in Commissioner v. Crichton, 42 B.T.A. 490, 492 (1940),
affd. 122 F.2d 181 (5th Cir. 1941), substantially similar
interpretations of the term “like kind” have appeared in all
applicable regulations beginning with those issued under the
Revenue Act of 1921.
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