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Throw your 1031 exchange in reverse.

Publication: California CPA
Publication Date: 01-SEP-03 		Format: Online
Delivery: Immediate Online Access
Full Article Title: Throw your 1031 exchange in reverse.(Property Exchanges; accounting)

Article Excerpt
Fundamentally, Sec. 1031 exchanges do not recognize any gain or loss on the exchange of property held for productive use in a trade or business, or for investment, if such property is exchanged for property of like kind, which is to be held either for productive use in a trade or business or for investment.

Further, IRC Sec. 1031(a)(3) requires a taxpayer to identify qualifying exchange replacement property within 45 days after closing the sale of a relinquished property.

But all too often in a Sec. 1031 delayed "forward" exchange, an exchanging taxpayer must scramble to identify a suitable replacement property in real estate markets that have too many qualified buyers and too few properties for sale.

A forward exchange occurs when a taxpayer sells the relinquished property, then later buys a replacement property within delayed exchange safe harbors, such as qualified intermediary and qualified escrow account [Treas. Reg. Sec. 1.1031(k)-1(g)].

PUTTING IT IN REVERSE

Taxpayers facing bleak prospects for finding suitable Sec. 1031 replacement property may...

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