Bill is owner, in fee simple absolute, of a quarter section farm in Pine County, Iowa (a quarter section is 160 acres). He wishes to sell this property in order to make other investments with a greater income potential so he can put his three kids through college. Two things are bothering him, though. His neighbor, Paul, farms two other quarter sections, one on each side of Bill's property. For the past twelve years, Paul has created a shortcut through Bill's land at planting and harvest time. This saves Paul a drive of about a mile each time he services both of his properties. Bill wants to know whether that will present a problem at the time of sale.

Address the following issues:

1. Think about whether Paul has a claim to the property, using the Texas Property law, and then make a recommendation to Bill based upon your findings.

1. In addition, assume that you have advised Bill to sell the entire parcel to Whipstich Realty Co. for development as a mixed-use development.

1. When assisting Bill with his options, you ask him to consider using the "Section 1031 exchange" allowed by the Internal Revenue Code to avoid paying any taxes on the gain on the property. *** This will require online research, or a call to your friendly local realtor, accountant, or attorney for assistance.***

1. Once you have determined the eligibility of the property for this type of tax treatment, decide whether you would recommend Bill take advantage of that opportunity or whether he should simply bite the bullet and pay the capital gain taxes at the time of sale.

1. You may make whatever assumptions you need to make about the value of the farm-based upon your understanding of the current market value of similar property in your state.