Bolker v. Commissioner
United States Court of Appeals for the Ninth Circuit
760 F.2d 1039 (1985)
Joseph Bolker (plaintiff) was the sole shareholder of Crosby Corporation (Crosby), which owned a property called Montebello. Bolker anticipated business circumstances that would make it desirable for him to take personal ownership of Montebello and develop the property. Bolker arranged for Crosby’s liquidation and transfer of Montebello to himself. Before Bolker actually liquidated Crosby or acquired Montebello, he encountered financing difficulties and decided to exchange Montebello for other property after the transfer. Bolker formed Parlex, a corporation, to assist with the property exchange. After Crosby transferred Montebello to Bolker’s ownership, Parlex contracted with a bank to exchange Montebello for the bank’s real estate. The property exchange took place three months later, and Bolker took title to the bank’s real estate. Under the nonrecognition provision of § 1031(a) of the federal tax code, Bolker did not report his gain from the property exchange as taxable income. However, the commissioner of internal revenue (commissioner) (defendant) determined that the property exchange was not eligible for nonrecognition, and issued notices of deficiency against Bolker. Bolker petitioned the tax court for a redetermination. The tax court ruled for Bolker. The commissioner appealed to the United States Court of Appeals for the Ninth Circuit.
Rule of Law
Holding and Reasoning (Boochever, J.)
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