Court Memorandum by Judge Sidney R. Thomas: "Teruya Brothers Ltd. et al. v. Commissioner"

Sidney R. Thomas, a judge serving on the Ninth Circuit of the United States Court of Appeals, has affirmed the Tax Court decision in which the IRS determined that a company cannot defer gain on its like-kind exchange of properties through a qualified intermediary that sold them and bought replacement property from a related party, finding that the purpose of the transaction was tax evasion. The two like-kind transfers of the company do not qualify for nonrecognition treatment.