T. J. Starker v. United States

T. J. Starker appeals from the dismissal, on stipulated facts, of his tax refund action. We affirm in part and reverse in part.

I. FACTS

On April 1,1967, T. J. Starker and his son and daughter-in-law, Bruce and Elizabeth Starker, entered into a “land exchange agreement” with Crown Zellerbach Corporation (Crown). The agreement provided that the three Starkers would convey to Crown all their interests in 1,843 acres of timberland in Columbia County, Oregon. In consideration for this transfer, Crown agreed to acquire and deed over to the Starkers other real property in Washington and Oregon. Crown agreed to provide the Starkers suitable real property within five years or pay any outstanding balance in cash. As part of the contract, Crown agreed to add to the Starkers’ credit each year a “growth factor”, equal to six per cent of the outstanding balance.

On May 31, 1967, the Starkers deeded their timberland to Crown. Crown entered “exchange value credits” in its books: for T. J. Starker’s interest, a credit of $1,502,-500; and for Bruce and Elizabeth’s interest, a credit of $73,000.

Within four months, Bruce and Elizabeth found three suitable parcels, and Crown purchased and…