Brief Fact Summary. Respondent exchanged mineral interests in an undeveloped piece of land with her kids for interest in a city lot. Respondent treated the exchange as a nontaxable like kind exchange of real property.
Synopsis of Rule of Law. Exchanges of real property may be nontaxable if it is a like kind exchange.
It was not intended to draw any distinction between parcels of real property however dissimilar they may be in location, in attributes and in capacities for profitable use.View Full Point of Law
Issue. Should the property have been treated as a like kind exchange free from taxation?
Held. Circuit Judge Hutcheson issued the opinion for the United States Fifth Circuit Court of Appeals in holding that the exchange was a like kind exchange and nontaxable.
Discussion. The Court of Appeals determined that mineral rights are interests in real and not personal property and the plain language of the law provides that exchanges of like kind real property are not taxable.