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Email Print HOW SECURE ARE THE EXCHANGE FUNDS? Security of the exchange proceeds is paramount to all other aspects of a successful 1031 exchange. Some taxpayers are not aware that with the exception of state level consumer protection regulations for qualified intermediary (QI) companies in handful of states (currently California, [...]
Email Print INVESTORS CAN MEET MANY OBJECTIVES UNDER IRC SECTION 1031 Section 1031 tax-deferred exchanges are a popular tax-deferral strategy for business owners and taxpayers who want to accomplish a wide range of business and/or investment objectives including some of the following: 1. Preservation of Equity - A properly structured 1031 [...]
Email Print ANALYZE THE BENEFITS BEFORE SELLING The benefits of 1031 exchanges can be significant for taxpayers who own investment property. Taxpayers have the potential to defer all capital gain taxes, depreciation recapture, the net investment income tax( NIIT), and state taxes. If the requirements of a valid 1031 exchange [...]
Email Print CONSIDER THESE ISSUES BEFORE CLOSING ON PROPERTY HELD FOR INVESTMENT Assume a married California couple has held an investment property for many years and upon selling will have $1,000,000 in proceeds (after closing costs). Also, assume this property has $900,000 of capital gain of which $300,000 of this [...]
Email Print LESSONS LEARNED FROM GOOLSBY V. COMMISSIONER A taxpayer’s intent to hold both the relinquished property and replacement property for investment or for use in a trade or business is a requirement for any exchange transaction qualifying for tax deferral under Internal Revenue Code Section 1031. The IRS and [...]
Email Print LESSONS FROM REESINK V. COMMISSIONER A property will be eligible for exchange under Internal Revenue Code Section 1031 only if the taxpayer is able to demonstrate the intent to hold the property for productive use in a trade or business or for investment at the time [...]
Email Print Lessons Learned from Crandall V. Commissioner A sale of property for cash or other property is generally a taxable event unless another provision of the Internal Revenue Code (IRC) permits tax deferral. Where tax deferral is available, the IRS and courts typically require strict compliance with the statute [...]
Email Print AVAILABLE OPTIONS FOR PARTNERS AND PARTNERSHIPS (AND LLCs) Like any other taxpaying entity, a partnership (and a limited liability company taxed as a partnership, generally referred to herein as a “partnership”) can engage in a like-kind exchange under IRC Section 1031 to defer capital gain taxes. [...]
Email Print AN ANALYSIS OF THE BENEFITS ALONG WITH BASIS AND TAX CALCULATIONS Selling one property and acquiring several replacement properties in an Internal Revenue Code Section 1031 exchange can have significant advantages over a simple trade of one income property for another. The following discussion describes some of those [...]
Email Print SUMMARY OF THE EXEMPTIONS AND RULES Some states impose a mandatory tax withholding requirement on the sale of real property by nonresident individuals or entities. In some cases, an exemption is available for investors performing 1031 exchanges. Below is a brief summary of some state withholding requirements: ALABAMA Requirement: [...]
