IRS GUIDANCE EXTENDS 1031 EXCHANGE DEADLINES
On April 9, 2020 the IRS issued Notice 2020-23. This Notice extended many deadlines for taxpayers affected by the COVID-19 pandemic including Section 1031 exchange time deadlines.
This Notice provides that any person performing a time-sensitive action listed in either § 301.7508A-1(c)(1)(iv) of the Procedure and Administrative Regulations or Revenue Procedure 2018-58, 2018-50 IRB 990 (December 10, 2018), which is due to be performed on or after April 1, 2020, and before July 15, 2020 (Specified Time-Sensitive Action), is an Affected Taxpayer. For purposes of this Notice, the term Specified Time-Sensitive Action also includes an investment at the election of a taxpayer due to be made during the 180-day period described in section 1400Z-2(a)(1)(A) of the Code. This includes the 45-Day Identification and 180-Day Exchange Period deadlines in a 1031 exchange.
Pursuant to Notice 2020-23, if a taxpayer’s 45-day Identification Period or 180-day Exchange Period falls between April 1 and July 15, this period is automatically extended to July 15, 2020.
In the absence of further IRS guidance, only deadlines between the dates of April 1 – July 15, 2020 are extended. This Notice does not address deadlines before or after this specific time period. In addition, this Notice is different from many previous IRS Disaster Relief Notices and does not provide clear answers to other deadline related issues.
This Notice does not reference Section 17 of Revenue Procedure 2018-58, which provides an extension of 120 days or until the date specified in the Notice. It is uncertain and not clear in Notice 2020-23 if the 120-day deadline extension provided in previous IRS Disaster Relief Notices applies.
Finally, some taxpayers were seeking IRS guidance starting from the date of the FEMA and Stafford Act declaration on March 13, 2020. Other taxpayers were hoping for a deadline extension to apply from the date of the FEMA disaster declaration on January 20, 2020. At this point in time, taxpayers should make decisions based upon known IRS guidance.
Asset Preservation, Inc. (API) does not know whether additional guidance will be released by the IRS addressing these and other uncertain issues. We will provide further updates if additional guidance is released on these 1031 exchange related issues in the future. API strongly urges taxpayers to consult with your legal and/or tax advisors regarding your specific 1031 exchange transaction.