¶1dissenting: I cannot agree that there was an “exchange” of property in this case. Plainly, there is no “exchange” under section 1031 where the seller of property merely uses the proceeds of sale to purchase other like property, cf. Trenton Cotton Oil Co. v. Commissioner, 147 F. 2d 33, 36 (C.A. 6); John M. Rogers, 44 T.C. 126, affirmed per curiam 377 F. 2d 534 (C.A. 9), notwithstanding that there may be an “exchange” where the seller persuades the purchaser to acquire other property desired by the seller and to substitute such other property for the purchase price, cf. Coastal Terminals, Inc. v. United States, 320 F. 2d 333 (C.A. 4). The difficulty here is that the purchaser, Southern Pacific Co., was unwilling in turn to purchase other properties to be used in “exchange” for the Elk Grove property that it was purchasing from petitioners. The majority opinion gets around this difficulty by concluding that Polhemus and Brannely, petitioners’ attorneys who purchased the other properties, were acting as agents [for Southern Pacific, a conclusion that appears to me to be wholly unsupported. Polbemus and Brannely were not agents for Southern Pacific, and there was no “exchange” of like properties between petitioners and Southern Pacific.
¶2Nor is there any support for the theory suggested in the concurring opinion, relying “upon substance” to achieve “a more equitable application of the law.” Concededly, the statute as written does not apply where the seller merely uses the proceeds of the sale to buy other property. And that is all that occurred here. The fact that an exchange could theoretically have been arranged so as to make the statute applicable may be unfortunate for petitioners, but that unhappy result is brought about by Southern Pacific’s unwillingness to participate in such manner. I can see no reason for rewriting the statute; its terms are specific. See Trenton Cotton Oil Co. v. Commissioner, 147 F. 2d at 36. Where Congress wanted to permit nonrecognition upon the reinvestment of proceeds, it expressly did so in the case of the sale of a residence in the closely related provisions of section 1034.