11th Circuit Affirms Finding Aim of Like-Kind Exchange Was to Avoid Tax

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The U.S. Court of Appeals for the 11th Circuit affirms a U.S. Tax Court decision that found that a taxpayer failed to prove its principal purpose was not tax avoidance in undertaking a like-kind exchange of commercial properties in which the replacement property was purchased from a related person. The Tax Court ruling says Ocmulgee Fields Inc.'s exchange with a qualified intermediary was part of a transaction structured to avoid the purposes of Section 1031(f) of the tax code, which governs like-kind exchanges between related persons. “Although Ocmulgee Fields has let loose a barrage of explanations for why it structured its exchange as it did, the record adequately supports the tax court's finding that Ocmulgee Fields structured its transactions to avoid the purposes of § 1031(f),” writes Judge Ebel for the 11th Circuit.