Let us create a 3D eBook for you!
Let us create a 3d Digital eBook for you! DigyCat.com

1031 Exchange Rules and Requirements


Following is a reproduction of the IRS's rules and requirements for 1031 tax deferred exchanges with regards to real property. If you have any questions regarding the sale of your real property or questions about what qualifies for a 1031 exchange or not, please consult your tax professional.

Sec. 1031. - Exchange of property held for productive use or investment

(a) Nonrecognition of gain or loss from exchanges solely in kind
(1) In general
No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.
(2) Exception
This subsection shall not apply to any exchange of -
(A)stock in trade or other property held primarily for sale,
(B)stocks, bonds, or notes,
(C)other securities or evidences of indebtedness or interest,
(D)interests in a partnership,
(E)certificates of trust or beneficial interests, or
(F)choses in action.
For purposes of this section, an interest in a partnership which has in effect a valid election under section 761(a) to be excluded from the application of all of subchapter K shall be treated as an interest in each of the assets of such partnership and not as an interest in a partnership.
(3)Requirement that property be identified and that exchange be completed not more than 180 days after transfer of exchanged property For purposes of this subsection, any property received by the taxpayer shall be treated as property which is not like-kind property if -
(A)such property is not identified as property to be received in the exchange on or before the day which is 45 days after the date on which the taxpayer transfers the property relinquished in the exchange, or
(B)such property is received after the earlier of -
(i)the day which is 180 days after the date on which the taxpayer transfers the property relinquished in the exchange, or
(ii)the due date (determined with regard to extension) for the transferor's return of the tax imposed by this chapter for the taxable year in which the transfer of the relinquished property occurs.
(b)Gain from exchanges not solely in kind
If an exchange would be within the provisions of subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain, but also of other property or money, then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property.
(c) Loss from exchanges not solely in kind
If an exchange would be within the provisions of subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized.
(d) Basis
If property was acquired on an exchange described in this section, section 1035(a), section 1036(a), or section 1037(a), then the basis shall be the same as that of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized on such exchange. If the property so acquired consisted in part of the type of property permitted by this section, section 1035(a), section 1036(a), or section 1037(a), to be received without the recognition of gain or loss, and in part of other property, the basis provided in this subsection shall be allocated between the properties (other than money) received, and for the purpose of the allocation there shall be assigned to such other property an amount equivalent to its fair market value at the date of the exchange. For purposes of this section, section 1035(a), and section 1036(a), where as part of the consideration to the taxpayer another party to the exchange assumed (as determined under section 357(d)) a liability of the taxpayer, such assumption shall be considered as money received by the taxpayer on the exchange.
(e)Exchanges of livestock of different sexes
For purposes of this section, livestock of different sexes are not property of a like kind.
(f)Special rules for exchanges between related persons
(1)In general If -
(A)a taxpayer exchanges property with a related person,
(B)there is nonrecognition of gain or loss to the taxpayer under this section with respect to the exchange of such property (determined without regard to this subsection), and
(C)before the date 2 years after the date of the last transfer which was part of such exchange -
(i)the related person disposes of such property, or
(ii)the taxpayer disposes of the property received in the exchange from the related person which was of like kind to the property transferred by the taxpayer, there shall be no nonrecognition of gain or loss under this section to the taxpayer with respect to such exchange; except that any gain or loss recognized by the taxpayer by reason of this subsection shall be taken into account as of the date on which the disposition referred to in subparagraph (C) occurs.
(2)Certain dispositions not taken into account
For purposes of paragraph (1)(C), there shall not be taken into account any disposition -
(A)after the earlier of the death of the taxpayer or the death of the related person,
(B)in a compulsory or involuntary conversion (within the meaning of section 1033) if the exchange occurred before the threat or imminence of such conversion, or
(C)with respect to which it is established to the satisfaction of the Secretary that neither the exchange nor such disposition had as one of its principal purposes the avoidance of Federal income tax.
(3)Related person
For purposes of this subsection, the term ''related person'' means any person bearing a relationship to the taxpayer described in section 267(b) or 707(b)(1).
(4)Treatment of certain transactions This section shall not apply to any exchange which is part of a transaction (or series of transactions) structured to avoid the purposes of this subsection.
(g)Special rule where substantial diminution of risk
(1)In general
If paragraph (2) applies to any property for any period, the running of the period set forth in subsection (f)(1)(C) with respect to such property shall be suspended during such period.
(2)Property to which subsection applies
This paragraph shall apply to any property for any period during which the holder's risk of loss with respect to the property is substantially diminished by -
(A)the holding of a put with respect to such property,
(B)the holding by another person of a right to acquire such property, or
(C)a short sale or any other transaction.
(h)Special rules for foreign real and personal property
For purposes of this section -
(1) Real property
Real property located in the United States and real property located outside the United States are not property of a like kind.
(2) Personal property
(A)In general
Personal property used predominantly within the United States and personal property used predominantly outside the United States are not property of a like kind.
(B)Predominant use
Except as provided in subparagraph [1] (C) and (D), the predominant use of any property shall be determined based on - ''subparagraphs''.
(i)in the case of the property relinquished in the exchange, the 2-year period ending on the date of such relinquishment, and
(ii)in the case of the property acquired in the exchange, the 2-year period beginning on the date of such acquisition.
(C)Property held for less than 2 years
Except in the case of an exchange which is part of a transaction (or series of transactions) structured to avoid the purposes of this subsection -
(i)only the periods the property was held by the person relinquishing the property (or any related person) shall be taken into account under subparagraph (B)(i), and
(ii)only the periods the property was held by the person acquiring the property (or any related person) shall be taken into account under subparagraph (B)(ii).
(D)Special rule for certain property
Property described in any subparagraph of section 168(g)(4) shall be treated as used predominantly in the United States

Neda Dabestani-Ryba is a licensed Realtor in Maryland. She is a member of the President's Circle of Top Real Estate Professionals. She can be reached at (800) 536-3806 or visit her website for more information: http://neda.dabestani.pcragent.com/Prudential Carruthers REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.


MORE RESOURCES:

Taxes - Google News

This RSS feed URL is deprecated

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

The case for a junk food tax - Vox


Vox

The case for a junk food tax
Vox
Some kind of government intervention in the food environment probably has to be part of the solution. Taxes have been an effective, though still controversial, approach to curbing the consumption of tobacco, alcohol, and soda. Now researchers from New ...

and more »

4 things to know about the new US tax law - Yahoo Finance


Yahoo Finance

4 things to know about the new US tax law
Yahoo Finance
Under the old tax code, the average family of four (that submitted taxes married-filing-jointly) received a tax break of $16,200 through the personal exemption, one $4,050 exemption for every member of the family. That's gone now, but in its place the ...
Gig-job workers had better beware of pay-as-you-go tax payments CNBC

all 2 news articles »

9 Ways the New Tax Law Affects Millennials - Investopedia (blog)


Investopedia (blog)

9 Ways the New Tax Law Affects Millennials
Investopedia (blog)
The new tax law, the Tax Cuts and Jobs Act, has generated significant buzz as tax experts speculate on how the average American's tax bill will be affected. Some of the most important changes center on key deductions and credits that could have a ...
Ask The Taxgirl: Claiming A Tax Refund When You Owe Tax Forbes
Here's the First Day You Can File Your Taxes This Year Motley Fool

all 81 news articles »

Phone, hotel taxes likely to rise in Naperville - Chicago Daily Herald


Phone, hotel taxes likely to rise in Naperville
Chicago Daily Herald
"From my perspective, especially with the new federal tax law that caps state and local taxes at a $10,000 deduction, it makes a lot of sense to look for alternative revenue streams other than property taxes," Mayor Steve Chirico said. "I think these ...

Did Cook County's failed soda tax cause sales taxes to fizzle, too? - Chicago Daily Herald


Chicago Daily Herald

Did Cook County's failed soda tax cause sales taxes to fizzle, too?
Chicago Daily Herald
The decline in tax revenue from August to September is the equivalent of nearly 2 million fewer 2-liter bottles of soda being sold. Receipts from November -- the fourth and final month the sweetened beverage tax was in effect -- aren't expected until ...

The Government's Taxes on Citizens' Free Time - New Republic


New Republic

The Government's Taxes on Citizens' Free Time
New Republic
When will workers see the fruits of the recently passed Republican tax bill? In just a few weeks, according to the Internal Revenue Service. Last Thursday, the agency released updated tax withholding tables for employers, so that the amount taken out ...
The IRS hired bill collectors to collect back taxes — and got ripped off Los Angeles Times

all 38 news articles »

State of Taxes: Rockland County braces for 2018 tax debate: Tax Watch - The Journal News | LoHud.com


The Journal News | LoHud.com

State of Taxes: Rockland County braces for 2018 tax debate: Tax Watch
The Journal News | LoHud.com
Tax Watch columnist David McKay Wilson looks into the tax debate brewing on many levels in Rockland County in 2018. A decade after borrowing $191 million to pay property tax refunds to a power plant owner, the North Rockland schools still have 20 more ...

Analysis: There's a reason Texas governors keep failing to lower property taxes - Texas Tribune


Texas Tribune

Analysis: There's a reason Texas governors keep failing to lower property taxes
Texas Tribune
It's in the Texas Constitution: The state can't levy a property tax. The governor and the Legislature can't lower rates. The state doesn't do property appraisals, either, so they can't mess with the value of any particular property on the tax rolls ...
Abbott wants to limit local jurisdictions' ability to raise Texans' taxes Dallas News
Gov. Abbott proposes 2.5 percent cap on property tax revenues Chron.com

all 31 news articles »

Financial Sinkhole States In The Trump Tax Era - Forbes


Forbes

Financial Sinkhole States In The Trump Tax Era
Forbes
What damage will the loss of a deduction do to blue states with stiff taxes? Do you live in a sinkhole state? There are eight of them, led by California and New York. These are places where the population dependent on the state — for employment ...

LargeFriends.com - the best dating site for plus-sized singles!
SuccessfulMatchCentral.com - the best dating site for plus-sized singles!

PreLaunchX

PrimeNews Domain Is For Sale - $5,000 For Enquiries eMail Us

© www.PrimeNews.biz - 2012

home | site map | links