26 CFR 1.1033(g)-1: Condemnation of real property held for productive use
in trade or business or for investment.

	The acquisition of an interest in overriding oil and gas royalties with
proceeds from the sale of unimproved real estate under threat of
condemnation is a replacement with "like kind" property qualifying for
nonrecognition of gain under section 1033 of the Code.


REV. RUL. 72-117

	In 1965, the taxpayer acquired as an investment unimproved real estate.
In 1970, the property was sold at a gain to a governmental authority under
threat of condemnation. The amount received for the property was
immediately reinvested in interests in overriding oil and gas royalties,
subject to depletion allowances.

	Held, the overriding oil and gas royalties are interests in real
property. Revenue Ruling 55-526, C.B. 1955-2, 574, and Revenue Ruling
68-226, C.B. 1968-1, 362. Accordingly, there was a replacement with "like
kind" property under section 1033(g) of the Internal Revenue Code of 1954.
If all of the other requirements of section 1033(a) of the Code are
satisfied, the gain qualifies for nonrecognition under section 1033 of the
Code.