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exchange for the San Diego property within 180 days of the sale
of the San Diego condominium.
On November 6, 2001, petitioner authorized two wire
transfers of $30,000 each from her account to the account of her
cousin, James F. Graves (Graves). Petitioner was told by Graves
that he was going to invest the funds in a business which would
satisfy the provisions of a section 1031 exchange. Petitioner
received a promissory note dated November 8, 2001, signed by
Graves. The note reflected a promise to pay a sum of $60,000
with a maturity date of February 8, 2002, and interest at 9
percent. Petitioner believed that Graves attempted to invest the
funds in real estate but was unable to do so. The record
reflects that the funds may have been directed to ESPO
Entertainment Center, LLC (ESPO) in an attempt to acquire
property. It further appears that property was never purchased,
and ESPO went out of business in 2002 or 2003.2 At the date of
trial, petitioner had not received any return of funds from
Graves or from any other person or entity relating to the $60,000
forwarded to Graves.
2 The record is sparse as to the relationship between ESPO,
Graves, and petitioner. A Form K-1, Partner’s Share of Income,
Credits, Deductions, etc., was issued to petitioner (through her
revocable living trust), reflecting negative income for 2003. A
letter from a law firm in 2005 indicates that ESPO filed a final
return for 2003 and that it was dissolved by the Illinois
Secretary of State in 2004.
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