TAXLITIGATOR – Tax Controversy (Civil & Criminal) Report

Internal Revenue Code (“IRC”) sec. 1033 allows a taxpayer to elect to defer gain from an involuntary conversion of property if the taxpayer “purchases other property similar to or related in service or use to the property so converted, or purchases stock in the acquisition of control of a corporation owning such property.” In a recently issued precedential decision, Appeal of Mitchell, 2026-OTA-196P, the California Office of Tax Appeals (“OTA”) held that a taxpayer was entitled to nonrecognition of gain under sec. 1033 from the sale of property adjacent to the converted property. Let’s first look at the facts and then the OTA’s analysis that led to its holding in favor of the taxpayers.

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Robert S. Horwitz is a Principal at Hochman Salkin Toscher Perez P.C., former Chair of the Taxation Section, California Lawyers’ Association, a Fellow of the American College of Tax Counsel, a former Assistant United States Attorney and a former Trial Attorney, United States Department of Justice Tax Division. He represents clients throughout the United States and elsewhere involving federal and state administrative civil tax disputes and tax litigation as well as defending clients in criminal tax investigations and prosecutions. In 2022 the Tax Section of the California Lawyers Association awarded him the Joanne M. Garvey Award for lifetime achievement in and contributions to the field of tax law. Additional information is available at http://www.taxlitigator.com

For more information, please contact Robert S. Horwitz at horwitz@taxlitigator.com