California Woman Who Won ‘Drop and Swap’ Tax Case Loses Bid for Fees

A taxpayer who won her like-kind transaction case at the California Office of Tax Appeals can’t recoup the costs of the litigation from the the Franchise Tax Board, the office ruled.

In 2018, the OTA split 2-1 in favor of Sharon Mitchell, finding she could use a property exchange transaction known as a drop and swap to defer taxable gain. Mitchell, a member of a general partnership that sold its joint investment, elected to reinvest in a similar property while others members cashed out.

In a nonprecedential opinion posted Monday, the OTA said that the 2018 ...