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factual dispute. Accordingly, the burden of proof does not play
a role in this regard.
II. Section 1031
Section 1031 provides that no gain or loss is recognized
when business or investment property is exchanged solely for
other business or investment property of like kind. A taxpayer
must satisfy a number of technical requirements to come within
the nonrecognition provisions of section 1031 including that
timing requirements are met regarding identification and receipt
of replacement property. Sec. 1031(a)(3). Here, there was no
replacement property, and petitioner withdrew the proceeds of
sale from the exchange company prior to forwarding the funds to
Graves. Petitioner does not seriously argue that she complied
with the provisions of section 1031. While she may have been
misled by Graves, it is clear that she did not satisfy any of the
provisions of section 1031. Petitioner’s intent to exchange the
property and qualify for nonrecognition treatment is not
sufficient to satisfy the statute. See Biggs v. Commissioner,
632 F.2d 1171 (5th Cir. 1980), affg. 69 T.C. 905 (1978).
Petitioner does not qualify for nonrecognition treatment, and
respondent is sustained on this issue.
III. Theft Loss
Section 165(a) provides a deduction for any loss sustained
during the taxable year not compensated for by insurance or
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