Moore v. Commissioner

Barry and Deborah Moore (plaintiffs) purchased two parcels of lakefront land, along with a mobile home, in Lincoln County, Georgia, in 1988. The Moores used this property and mobile home as a vacation home, spending weekends at the property on multiple occasions during warm weather months and visiting the property during the winter only to perform upkeep. The Moore family later moved to a different residential address that made the Lincoln County property impractical, and they visited that property less frequently. Accordingly, on December 3, 1999, the Moores agreed to purchase lakefront property in Forsyth County, Georgia. In 2000, the Moores attempted to exchange the Lincoln County property for the escrow agent’s 25 percent interest in the Forsyth County property in order to qualify for the 26 U.S.C. § 1031 requirements to establish the transfers as a like-kind exchange. The commissioner of Internal Revenue (defendant) did not agree with the contention that the transfer was a § 1031 exchange, and the Moores subsequently filed suit. At issue was whether the two properties were held for investment purposes, as required to establish a § 1031 exchange. The Moores pointed out that they had expectations that both properties would increase in value. The government argued that expectations aside, the Moores had never offered the properties for rent or sale or used them for purposes other than those consistent with being vacation homes.