tracts were covenants running with and appurtenant to the Martin D. Ginsburg, Alan S. Kaden, and Richard A. Wolfe, for petitioner. Alan M. Jacobson and Donald L. Wells, for respondent. OPINION GERBER, Chief Judge: The parties filed motions for summary judgment1 under Rule 1212 at docket No. 20328-04 with respect to the issue of whether coal supply contracts that burdened coal mine property received by a partnership, as part of an exchange under section 1031, are like-kind property to the gold mining property transferred by the partnership. Background On June 25, 1993, Peabody Natural Resources Co. (a partnership then known as Hanson Natural Resources Co.) (Peabody) transferred the assets of its gold mining business to Santa Fe Pacific Mining Corp. (Santa Fe), an unrelated corporation, in exchange for the assets of Santa Fe's coal mining business. The parties to the exchange agreed that the mining assets exchanged by each had a total value of approximately $550 million. Peabody treated the transaction as a like-kind exchange under section 1031. The transfer by Peabody to Santa Fe was of gold mines and other gold mining property (including buildings and other improvements, machinery and equipment, and mine exploration and development rights). In exchange, among other things, Peabody (1) received from Santa Fe the Lee Ranch coal mine in New Mexico (which included fee simple land and coal leases to other land giving the leaseholder 1 Respondent filed a cross-motion for partial summary judgment, as his position, if correct, would not have resolved all controversy between the parties. However, the partnership's position, if correct, would be dispositive of all matters in controversy. 2 All Rule references are to the Tax Court Rules of Practice and Procedure, and all section references, unless otherwise indicated, are to the Internal Revenue Code as amended and in effect for the years in issue. rights to the coal in place) and (2) assumed all obligations of Santa Fe under two long-term coal supply contracts entered into in the early 1980s by Santa Fe with Tucson Electric Power Co. (TEPCO) and Western Fuels (WEF), respectively. The Lee Ranch was in a remote part of New Mexico and consisted of 13,594 acres of fee simple land and 1,800 acres of leased coal land. During the early 1990s, the annual coal output of the Lee Ranch mine was approximately 3.2 million to 5.0 million tons. At the time of the June 25, 1993, exchange, the Lee Ranch mine contained coal reserves of approximately 200 million tons. The gold mines received by Santa Fe were not burdened by gold supply contracts. The TEPCO supply contract began during 1983. In connection with TEPCO's 1991 bankruptcy, however, the contract was renegotiated resulting in a coal price reduction from the original 1983 contract. The renegotiated contract was for a period ending December 31, 2009. Either party, however, could extend the contract for additional 5-year periods if the parties were able to negotiate a good faith price that reflected the then-current market price for coal. Under the contract, Santa Fe was the exclusive supplier of the coal required for the operation of Units 1 and 2 of TEPCO'S Springerville Station power plant, and TEPCO was obligated to purchase a specified annual minimum amount of coal. There was no maximum limit on the amount of coal that Santa Fe could sell to TEPCO under the contract. The contract, however, did contain estimates that the combined requirements of Springerville Station Units 1 and 2 would range from .6 million to 2.34 million tons per year during the term of the contract. The quality of the coal was defined in the contract, and the type of coal specified in the contract was the type of coal produced in the Lee Ranch mine. Under the contract, Santa Fe committed to use its best efforts to mine the Lee Ranch mine's coal reserves and to sell TEPCO the amount of coal needed for operation of the Springerville Station power plant. The per-ton price of coal under the TEPCO contract was a base price adjusted by Santa Fe's actual mining costs. The contract was to run through December 31, 2009, or until the retirement of the power station but could be reopened for contract price renegotiation during July 2008 and at 5-year intervals after 2010. Specifically, the contract term was to extend until the earlier of either: (1) The date when Springerville Station Units 1 and/or 2 were retired from commercial operation; or (2) sometime after December 31, 2009, if the parties were unsuccessful in their good faith price renegotiations for any contract extension period. During the contract term Santa Fe was not permitted to sell coal to others if such sales would impair its ability to satisfy the supply contract obligations to TEPCO. The TEPCO supply contract "[inured] to the benefit of and [was] binding upon the Parties and their respective successors and assigns." The original 1983 contract allowed each party to assign its rights and duties so long as the assignee or delegatee "assumes" the rights and duties of the assignor and so long as the assignee or delegatee is "capable of performing this Agreement." The 1983 contract also required any assumption by an assignee to be accomplished in a written document entered into with the other parties to the 1983 contract. The WEF supply contract, also entered into in 1983, was between Santa Fe and WEF, a nonprofit cooperative comprising a group of relatively small electric utilities. WEF, in turn, would sell the coal to another cooperative, Plains Electric Generation & Transmission Cooperative, Inc. (Plains), for use in its Escalante Power Plant. Although the WEF supply contract is primarily between Santa Fe, as the seller, and WEF, as the buyer, that supply contract identified Plains as the guarantor of WEF's performance under that contract. That contract contained the recitation that WEF and Plains "desire to secure a reliable and reasonably priced supply of coal of the quality and quantities as set forth herein for use in the generation of electricity in Unit I, and potentially in an additional Unit II, of the [Escalante] Station." That contract also contained a price renegotiation provision that took effect in 1993 under which WEF could terminate the contract if a new long-term coal price were not negotiated. On account of WEF's deteriorating financial condition, it sought to renegotiate its contract. During 1990 the pricing provisions were modified resulting in coal price reductions and changes in other contract provisions. The renegotiated WEF contract ran until December 31, 2004, and could be extended for up to three 10-year periods by either party. Each 10-year extension depended on the parties' ability to renegotiate and agree to a new coal price which, in the parties' views, reflected the then market price for coal. Santa Fe was required to maintain coal reserves adequate to supply the quantity of coal called for under the WEF contract. The WEF contract provided that any party subsequently acquiring an interest in the Lee Ranch mine coal reserves “shall take such interest subject to the dedication and reservation" of said reserves. The contract also provided that the "dedication" was not intended to be construed as a transfer to WEF of an interest in the coal in place, but that it was "imposed as and *** [constituted] both an equitable servitude binding upon *** [Santa Fe] and *** [its] successors and assigns and a covenant running with * * * [Santa Fe's] interest". The contract price was based on a complex formula that, to some extent, was based on the variable and fixed costs incurred by Lee Ranch mine in supplying coal under the contract. Under the WEF contract, Santa Fe was the exclusive supplier of the Escalante Station's coal needs within minimum quantity and quality standards, on an annual basis, with no limit on the amount of coal that could be sold to WEF. The contract, however, did contain an estimate of the Escalante Station's requirements as being .5 million to 2.3 million tons per year. Under the WEF contract, Santa Fe had "the right to supply all of the Usage *** for each Year." Santa Fe could not sell coal from the Lee Ranch mine to others if doing so would impair its ability to satisfy its coal supply contract obligations to WEF. The WEF contract terms were to be interpreted under the laws of New Mexico. Under the WEF contract, Santa Fe would be allowed to supply coal from mines other than Lee Ranch mine if it were unable to remove coal from Lee Ranch mine on account of a force majeure. The WEF supply contract provided that it would "inure to the benefit of and be binding upon the Parties and their respective successors and assigns." Peabody and Santa Fe determined that the mining assets each exchanged had a total value of approximately $550 million. In accordance with section 1.1031(j)-1(a)(2), Income Tax Regs., Peabody separated into exchange groups the assets it transferred and received. Peabody treated the gold mines, coal mine reserves, and appurtenant supply contracts as real property. It valued the Lee Ranch mine coal reserves at $272.1 million. On its income tax returns for the years in issue, Peabody treated its exchange of the gold mining assets for coal mining assets as a like-kind exchange under section 1031. In the notices of final partnership administrative adjustment for Peabody's taxable years ended March 31, 1994 through 1996, and its short taxable year ended June 30, 1996, respondent determined that the supply contracts were not like-kind property as to which Peabody was entitled to nonrecognition treatment under section 1031. Discussion The focus of this case concerns a section 1031 like-kind exchange of gold mines for coal mines. Respondent acknowledges that the coal mines and gold mines are like-kind property as to which Peabody is entitled to nonrecognition treatment under section 1031(a). In petitioner's motion for summary judgment and respondent's cross-motion for partial summary judgment, the parties disagree about whether two coal supply contracts are real property and/or like-kind property within the meaning of section 1031 (i.e., whether the coal supply contracts are boot). Initially, we must decide whether the coal supply contracts are considered or treated as real property under New Mexico law. We must also decide whether those contracts, in the setting of this case, constitute "like-kind" property within the meaning of section 1031. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be granted with respect to a legal issue if there is "no genuine issue as to any material fact and * * * a decision may be rendered as a matter of law." Rule 121(a) and (b); Craig v. Commissioner, 119 T.C. 252, 259-260 (2002); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). There is no disagreement |