BLOG
<p>Both a 1031 exchange and a 721 exchange allow Exchangers to defer capital gains and other taxes on the sale of business or investment use real estate when proper procedures are followed, however they do have differences and they cannot be used interchangeably as each has specific considerations.</p>
<h2>What is a 1031 exchange?</h2>
<p>1031 exchange is one of the most popular tax strategies available when selling and buying real estate “held for productive use in a trade or business or investment”. Property owners of real estate used for business or investment use can utilize a 1031 exchange on the sale of the property to defer capital gains, depreciation recapture, state, and net investment income tax when they reinvest the proceeds from the sale into the purchase of qualifying property. It does not have to be the same kind of property. All types of real estate are considered like kind to all other types.</p>
<p>In a 1031 exchange, the Exchanger is not permitted to receive nor control and is not allowed to “benefit” from the funds from the sale of their sold property, the relinquished property. An example of benefitting would be to pledge the account as collateral for a loan. The funds are held with a Qualified Intermediary until the time the Exchanger is ready to close on the sale of their new property, the Replacement Property. The funds are then directly used to purchase the replacement property. Because the Exchanger never actually had any access or benefit from the funds and since the Exchanger traded the relinquished property for the replacement property through the Qualified Intermediary, they may defer the taxes they would normally pay if they had sold the property outright and retained the money.</p>
<h2>What is a 721 exchange?</h2>
<p>A 721 exchange, formally referred to as a 721 Umbrella Partnership Real Estate Investment (UpREIT), is similar to a 1031 exchange in that a real estate investor can sell a property used for business or investment use and defer taxes on the sale if they reinvest the funds by following specific criteria.</p>
<p>In a 721 exchange, the investor either (1) transfers ownership of the relinquished property to the REIT and receives an equivalent value in the form of operating partnership units or (2) or sells to a third party of choice using a 1031 exchange and investing the funds into a DST, often made available by the REIT. When sufficient time passes, usually two years, the DST interest can be traded for Real Estate Investment Trust (REIT) shares.</p>
<h2>Similarities and Differences of a 1031 Exchange and 721 Exchange</h2>
<h3>Similarities</h3>
<p>There are a handful of similarities between a 1031 exchange and a 721 exchange, which include:</p>
<ul>
<li>Property being sold must be held for business or investment use<br />
</li>
<li>When properly executed, both defer capital gain tax, depreciation recapture, state and net investment income tax<br />
</li>
<li>Both allow for investment diversification<br />
</li>
<li>Both allow heirs of the Taxpayer to get a “step-up” in basis if they pass away still vested with the REIT interest or Replacement Property interest in the case of a 1031 exchange</li>
</ul>
<h3>Differences</h3>
<p>The differences between a 1031 exchange and a 721 exchange are notable and include:</p>
<ul>
<li>A Qualified Intermediary facilitates a 1031 Exchange, while a 721 exchange is facilitated by the REIT sponsor<br />
</li>
<li>721 exchanges do not have the same timelines, 45-day Identification and 180-day Exchange period, as a 1031 Exchange 1031 exchange Replacement Property Identification Rules do not apply to 721 exchanges<br />
</li>
<li>In a 721 exchange a REIT must be willing to either acquire your Relinquished Property, or go through the process described above with a 1031 exchange and later trade for the REIT shares.<br />
</li>
<li>In a 721 exchange, once an investor sells the property to the REIT, they cannot do another exchange upon sale of the shares held. Once the REIT shares are sold, all the deferred taxes become payable regardless of entering into a new REIT investment. However, under 1031 exchange a Taxpayer can do consecutive exchanges indefinitely to continue deferral.</li>
</ul>
<p>Both 1031 and 721 exchanges provide real estate investors the opportunity exit out of existing real estate investment and reinvest without tax consequences. However, based on the details above they are unique and advanced planning and a thorough understanding should be in place prior to embarking on either. It is always recommended to talk with your CPA, Tax Advisor, or Financial Advisor prior to implementing any tax deferral strategies.</p>
<p> </p>
<p><em>The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.</em></p>
<p>As most people acquainted with 1031 exchange transactions know, a 1031 exchange can be used to defer capital gains taxes on the sale of virtually any “like-kind” real property interest. “Like-kind” real property is any property the taxpayer owns or intends to acquire for investment or productive use in a trade or business. Many times, the focus is on commercial, light industrial, office or residential properties, but a significant number of 1031 exchanges involve farm, ranch, and other agricultural properties.</p>
<h2>Ag-Related 1031 Exchanges</h2>
<p>In the past 40+ years in the transactional real estate and 1031 exchange arenas, we have witnessed Ag sector taxpayers increasingly use 1031 exchanges for a variety of reasons. The typical example is the sale of unproductive property or property not suited to an existing Ag operation and use of the exchange funds to acquire another more productive property or property that otherwise improves operational efficiencies.</p>
<p>Another expansion of opportunities afforded by a 1031 exchange is the sale of agricultural land or water rights, timber rights, oil and gas and mineral rights not necessary for farm or ranch operations and exchanges into other real property interests. Sometimes this type of transaction affords a farmer or rancher the opportunity to develop an in¬come stream not dependent on commodity prices or not subject to the vagaries of the agricultural economy.</p>
<p>Many agricultural landowners have sold perpetual easements or long-term leasehold interests (30+ years in duration) for the installation of wind power and solar power generation facilities on portions of their farms or ranches that are not integral to crop or livestock production. There are also increasing opportunities for farmers and ranchers to sell conservation easements to private conservation organizations or government entities such as the U.S. Department of Agriculture and use the cash proceeds to exchange into other real property interests.</p>
<p>We have also witnessed many situations in which the current generation of owners who have succeeded to multi-generational farms and ranches are faced with the reality that there is no next generation to work the land and livestock 24/7/365 days a year while facing fluctuations in the economy, disease, predators, drought, fires and other natural disasters. Fortunately for those folks, there are always buyers interested in agricultural land and the aging sellers can exchange out of a sale into other types of income-producing property. For the first time in their lives, those diverse income streams support the retirees independently of the agriculture markets.</p>
<h2>Investors Targeting Agricultural Properties</h2>
<p>On the other side of the equation, there are many investors who have begun to realize the benefits of investing in agri¬cultural property. Though the return on investment is not as high as certain types of commercial, office or residential rental property, pastureland, which is in short supply for livestock producers, provides a steady cash return and an upside in appreciation in value. Some Ag property buyers are developers who see another higher and best use for property that has historically been used in agribusiness.</p>
<p>Many agricultural investors are also investing in farmland which has heretofore been in dry land crop production or pastureland but has the capacity for increased production and profitability. Those producers can marshal underutilized water resources and, with enhanced irrigation systems and farming practices, convert dry land farms into other production such as row crops, vineyards, etc. The profitability of the land can also be changed with the introduction of organic crops which bring higher prices at the marketplace. With each of these modifications there is a corresponding appreciation in value of the land.</p>
<p>Don’t overlook the possibilities available to taxpayers in exchange transactions involving agricultural real estate. If you have any questions about these types of transactions, Accruit has a robust team which specializes in agribusiness real estate transactions, and we are happy to provide you with the expertise to successfully complete these types of exchange transactions.</p>
<p> </p>
<p><em>The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.</em></p>
<p>Ownership in passive real estate investments is becoming increasingly popular for a variety of reasons including aging real estate investors, new opportunities in the market, and the appeal of investments without management responsibilities. Two of the most common forms of passive ownership in real estate are REITs and DSTs. In this article we will discuss each and how they intersect with a 1031 Exchange, if at all. </p>
<h2>What is a Real Estate Investment Trust (REIT)?</h2>
<p>At its core, a Real Estate Investment Trust (REIT) is a company that owns and operates income-producing real estate or related assets. You can think of these as similar to a mutual fund that invests in real estate instead of stocks. These assets may include office buildings, shopping malls, multi-family housing, self-storage facilities, warehouses, and more. Some REITs provide financing to other companies that invest in these assets, in the form of mortgages or other loans. Most REITs trade on major stock exchanges, and thereby provide an investment opportunity, much like a mutual fund, to individuals who wish to benefit from investing in real estate without having to manage the day-to-day operations of real estate.</p>
<p>REITs are ongoing business entities, whose purpose is to make money for the investors by buying, managing, and selling real estate. When a REIT sells one asset, they have a fiduciary responsibility to the investors to replace that asset quickly to maximize the return on investment, and often do so using a 1031 Exchange at the REIT level.</p>
<p>However, because REITs trade on stock exchanges, investors don’t own an interest in property, but rather own a small share of the REIT much like shares of stock in any other publicly traded company. Given they do not have an ownership interest in the underlying real estate owned by these companies, under current Section 1031 rules, investors cannot sell or acquire shares in a REIT as part of a 1031 Exchange. Thus, if a REIT investor decides to sell their shares, they have created a taxable event, and may not use Section 1031 to defer the tax implications.</p>
<h2>What is a Delaware Statutory Trust (DST)?</h2>
<p>Delaware Statutory Trusts (DSTs) are legally recognized trusts, created under Delaware law, in which each investor owns a “beneficial interest” in the DST, the percentage interest is based upon the amount of the equity investment. Much like REITs, DSTs own and operate income-producing real estate or related assets. These assets may include office buildings, shopping malls, multi-family housing, self-storage facilities, warehouses, etc. Whereas REITs have the investment portfolio consisting of a number of individual properties, DSTs are often a single property. Like REITs, DSTs offer individual investors the opportunity to invest in these assets without the management headaches, additionally they offer accredited investors access to investment grade real estate that is generally more highly valued property than they could have acquired on their own. Different than REITs, the Internal Revenue Service has determined that investors in DSTs can hold undivided fractional interests in the real estate holdings of the DST rather than the company, so DST interests are considered “like-kind” property for 1031 exchange purposes.</p>
<p>Each DST is formed to acquire a unique real estate asset, or portfolio of assets. When the asset is later sold, the DST terminates, and distributes the profits directly to the beneficial owners. Those owners may choose to participate in a new 1031 Exchange, or not, depending on their unique needs, and should they not utilize a 1031 Exchange it would create a taxable event. The point is that DST investors are eligible for 1031 Exchange treatment upon sale, whereas REIT investors are not.</p>
<h2>Section 1031 Exchange Rules</h2>
<p>First, we must remember that Section 1031 exchange apply only to “real property held for productive use in a trade or business or for investment.” This phrase eliminates the prospect of structuring a 1031 Exchange for any non-real estate investment assets, as well as assets that were not held for business or investment use. REITs are structured as partnerships and prior to the Tax Cuts and Jobs Act, there was an explicit statement within the statue that eliminated the prospect of structuring a 1031 Exchange with shares in a partnership and, notes, stocks, bonds, certificates of trust, and other similar items, as well. With the 2021 revision, the word “real” was inserted before each instance of the word “property”, clearly limiting 1031 Exchanges to real estate.</p>
<h2>Do REITs and DSTs Intersect with a 1031 Exchange?</h2>
<p>An investor cannot directly invest into a REIT through a 1031 Exchange. However, by utilizing a 1031 Exchange an investor can invest directly into a DST as their Replacement Property. Should an investor’s end goal be to exit from their current investment real estate and ultimately invest into a REIT, they could utilize a 1031 Exchange to buy a DST and later use a <a href="/blog/what-difference-between-1031-exchange-and-721-exchange" title="What is a 721 Exchange?">721 Exchange</a> to accomplish such.</p>
<h2>Conclusion</h2>
<p>Whether an investor should invest in a REIT or DST, is a fact-specific inquiry. No single answer will be applicable to every investor. Thus, investors are encouraged to discuss their situations and their strategies with their financial planner, attorney, and accountant.</p>
<p> </p>
<p><em>The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.</em></p>
<p>Generally, 1031 Exchanges cannot be utilized to acquire real property that will be remodeled or otherwise improved or developed and resold, because the “qualified use” requirement contained in Code Section 1031 requires that the taxpayer have a bona fide intent at the time of acquisition <a href="/blog/1031-exchange-holding-period-requirements" title="Holding Period Requirements in a 1031 Exchange"><u><strong>to hold</strong></u></a> the property for productive use in a trade or business or for investment.</p>
<h2>Flip Properties</h2>
<p>That being said, there have been situations involving 1031 Exchanges by taxpayers with dealer/developer histories but varying fact patterns similar to the scenario described above where taxpayers have claimed the 1031 deferral and the IRS and courts have looked at the facts of each specific case in determining eligibility for 1031 deferral.</p>
<p>In determining if a property is being acquired and held by the taxpayer for purposes of resale to the taxpayer’s customers in the ordinary course of the taxpayer’s business,it is incumbent to devine the bona fide intent of the taxpayer at the time of acquisition and during the ownership period to determine whether the 1031 Exchange is valid.</p>
<p>Arguably, if the taxpayer has a bona fide intent at the time of acquisition to hold the property per the 1031 Exchange regulations and an unsolicited buyer comes along a couple weeks later and offers them twice what they paid for the property and the taxpayer sells, the taxpayer has met the qualified use requirement. What better investment is there? Another example is where the taxpayer gets a new job in a different area and the taxpayer cannot manage the property he or she recently acquired. One more example is a when a property is bought and the taxpayer makes every effort to rent it, but it does not get rented and has a buyer who is willing to acquire the property for another purpose.</p>
<p>From a practical standpoint, the taxpayer and their CPA must deal with the Form 8824 that is filed for that transaction involving a 1031 exchange. The form asks when the taxpayer acquired the real property described in the relinquished property contract and qualifying as “relinquished property” and when they sold it. A short holding period raises a red flag despite the taxpayer’s bona fide intent. The taxpayer may win the ensuing argument, but could spend more than the taxes on attorney and CPA fees. The taxpayer should always follow the guidance of their qualified CPA or other tax advisor in regard to the tax reporting.</p>
<h2>Criteria in distinguishing 1031 Exchange Property from “Dealer” Property</h2>
<p>As stated above, various criteria are often evaluated by those in the 1031 Exchange industry in determining whether property qualifies for Section 1031 treatment as opposed to being “dealer/developer” property. The criteria include the following:</p>
<ul>
<li>What is the initial purpose for which the property was purchased?</li>
<li>What was the purpose for which the property was later held?</li>
<li>What is the extent to which the taxpayer made improvements if any such as subdivision, roads/streets construction, utilities and other infrastructure build-outs, actual residential construction, etc.?</li>
<li>What is the taxpayer’s frequency, number, and consistency of property sales?</li>
<li>What is the size and type of transactions involved?</li>
<li>What is the taxpayer’s regular business?</li>
<li>What is the extent to which advertising, promotion, or other active efforts were made to recruit buyers for the sale of the property?</li>
<li>Was the property marketed with brokers?</li>
<li>What is the reason and purpose for which the property was held at the time of sale?</li>
</ul>
<p>Some cases that involved a determination of the validity of a 1031 Exchange on a property that was acquired for resale include: Redwood Empire Sav. & Loan Ass’n v. Comm’r, 628 F.2d 516, 517 (9th Cir. 1980); Pool v. Comm’r, 251 F.2d 233, 237 (9th Cir. 1957); Evans v. IRS, T.C. Memo. 2016-7 (January 2016); Paullus v. Commissioner, 72 T.C.M. 636 (1996).</p>
<p>AAdditional Tax Planning Options for Developers: Section 1227 Unrelated to a 1031 Exchange: Developers and their advisors may gain some comfort from Section 1227 of the Code which allows some taxpayers to sell up to five lots and pay long term capital gains tax on the proceeds. However, there are strict standards which must be met in order to obtain that benefit such as holding the properties for 5 years.</p>
<h2>Summary</h2>
<p>Sometimes it is hard to determine if a developer or a flipper is eligible for 1031 treatment. There is no explicit rule, rather it is a “facts and circumstances” test as to the property in question. A developer or flipper could have a long history of acquiring property and selling it in a short time-period, but a specific property property they own may have long been held as an investment or income producing property. Obviously the taxpayer’s intent at the time the property was acquired and the ability to substantiate that intent is key. Hopefully, the answers to the bullet points above can help a taxpayer or advisor determine whether tax deferral through Section 1031 is viable in connection with a particular piece of property.</p>
<p> </p>
<p><em>The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.</em></p>
<p>There are times when an Exchanger sells the Relinquished (old) Property for a higher value than the purchase price of the property to be acquired, referred to as the Replacement (new) Property. If nothing further is done, the left-over funds would be considered “boot” and fully taxable. An attractive alternative to a taxable event is to utilize the excess funds to make improvements or build from the ground up on the new property, known as an Improvement, Construction, or Build-to-Suit Exchange.</p>
<h2>Circumstances Requiring Build-to-Suit and Improvement Exchanges</h2>
<p>These fact patterns arise in two different ways. Perhaps the most frequently seen fact pattern is where the client has sold the old property, and identified a potential new property that would result in leftover funds, and the Exchanger wants to use those funds towards improving the new property from ground up or improvements to the existing property. For the purpose of this blog, let’s refer to both the ground up and improvements simply as improvements. The Improvement Exchange can include not only the improvements, but the value of the land purchase as well.</p>
<p>The other variation takes place where the taxpayer actually wishes to acquire the new property and begin the improvements before selling the old property. This scenario may be used if there are weather factors requiring improvements be completed as soon as possible or for a business to relocate in which the new property is needed as soon as the old one is sold. This version is “reverse” in nature since the new property will be acquired before the old one sells. While the order of events in these two scenarios differ, both are handled in the same way as a <a href="/blog/reverse-exchange-dummies" title="Reverse 1031 Exchanges for Dummies">Reverse Exchange</a>, but a standard Reverse Exchange doesn’t include building or improvements.</p>
<h2>Meeting the “Like-Kind” Requirement in Improvement Exchanges</h2>
<p>Most people know that IRS Section 1031 involves trading “like-kind” real estate. However, once an Exchanger acquires the new property, any improvements made after the acquisition constitute payment for labor and materials, and those payments would not constitute receipt of “like-kind” real estate.</p>
<h2>IRS Rev. Proc. 2000-37</h2>
<p>When the IRS came out with rules for this situation in the year 2000, those rules contained a path on how to structure such a transaction so that improvements could be completed with exchange funds prior to acquiring the new property. If structured the way the IRS recommends, the Exchanger will meet the “safe harbor” provided for under the rules. The benefit of being in the safe harbor is that the IRS is approving the structure in advance as to form. Think about the fact that insurance on your home protects you from loss, if applicable. The safe harbor is essentially insurance that protects you against a possible claim, or audit, that your Improvement Exchange fails to meet IRS requirements.</p>
<h2>Process of an Improvement Exchange</h2>
<p>The process is rather simple and many steps mirror those of a Reverse Exchange. The taxpayer engages with an exchange company, who will, for a fee, agree to acquire the new property at closing and improve it per the Exchanger's direction. Once the improvements are done, and subject to meeting the <a href="/blog/what-are-rules-identification-and-receipt-replacement-property-irc-§1031-tax-deferred-exchange" title="1031 Exchange Timeline Requirements">1031 timelines</a>, the taxpayer receives title from the exchange company. That way, the value of the improvements is already “baked into” the value of the property upon Exchanger’s receipt and the Exchanger will get total tax deferral.</p>
<h2>Roles in an Improvement Exchange</h2>
<p>When doing a conventional exchange of old property for new property, pursuant to other IRS rules, the exchange company acts as a <a href="/qi-services" title="Qualified Intermediary in a 1031 Exchange">Qualified Intermediary</a> (QI). However, when an exchange company is acting in connection with an Improvement Exchange, it is facilitated by an entity referred to as an Accommodator per the 2000 rules, technically known as a Qualified Exchange Accommodation Titleholder or (EAT). The EAT takes legal title to the new property through a new LLC to separate and insulate it from other Improvement and Reverse Exchanges that it is facilitating for other Exchangers at any given time.</p>
<p>Be advised that in these transactions, doing a reverse exchange does not mean that the forward exchange need not take place. The EAT holds, or parks, title to the new property and allows taxpayers to get the intended improvements in place. However, the QI facilitates the actual 1031 Exchange of the old property for the new property. A reverse exchange is not a substitute for the conventional 1031 exchange.</p>
<p>At times, the exchange company can service both portions of an Improvement Exchange, the forward 1031 exchange and the "parking” improvement portion as the QI and the EAT. Although one exchange company can “wear both hats,” many exchange companies across the country choose only to service forward exchanges. In that case, the QI might refer the client to an EAT that works in tandem with the QI in connection with their respective services. Accruit is one that offers both QI and EAT services.</p>
<p>Increased costs and complexities are a couple reasons that some QIs choose not to offer services for Reverse exchanges. Also, since the EAT needs to take title to the new property, that could result in greater exposure to potential liability, for example, if a person is injured on the property or if there is an environmental issue associated with the property. Some exchange companies prefer to avoid any such exposure.</p>
<h2>Costs Associated with Improvement Exchange</h2>
<p>On a relative scale, an Improvement Exchange is more costly than the standard forward 1031 exchange. As a practical matter, Exchangers generally have little issue with the higher fee since the service allows them to avoid substantial tax that would otherwise be owed without this technique. The fee to the EAT can be paid out of exchange funds and the fee and other soft costs incurred count making it closer to reach the amount of funds needed to be spent. In fact, the EAT can even reimburse the Exchanger for past and present expenses that the Exchanger has advanced. To make this happen the Exchanger must keep records of the invoice or bill and be able to present evidence that the expense has been paid.</p>
<p> </p>
<p><em>The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.</em></p>
<h2>Due to severe winter storms, flooding, and mudslides in California, the IRS has issued extensions of the 45-day and 180-day deadlines for several counties in California.</h2>
<p><br />
<u><strong>The Disaster Date is January 8, 2023. <em>The ORIGINAL General postponement date was May 15, 2023</em>.</strong></u></p>
<p> </p>
<h3><strong>UPDATED 10/16/23: </strong>This news release has been updated to change the filing and payment deadlines from Oct. 16, 2023 to Nov. 16, 2023. The Nov. 16 deadline also applies to the quarterly payroll and excise tax returns normally due on Oct. 31, 2023.</h3>
<p> </p>
<p><strong>UPDATED 2/23/23: </strong>Updated to change the filing and payment deadlines from May 15, 2023 to Oct. 16, 2023.</p>
<p> </p>
<p><em>The <strong>Disaster Date</strong> is listed above. Note that some disasters occur on a single date; others, such as flooding, occur over a period of days and the Disaster Date above is preceded by <strong>beginning or began</strong>.</em></p>
<p>Victims of severe winter storms, flooding, and mudslides in California beginning January 8, 2023, now have until May 15, 2023, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.</p>
<p>Following the disaster declaration issued by the Federal Emergency Management Agency, individuals and households affected by severe winter storms, flooding, and mudslides that reside or have a business in Colusa, El Dorado, Glenn, Humboldt, Los Angeles, Marin, Mariposa, Mendocino, Merced, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Ventura, Yolo, and Yuba counties qualify for tax relief.</p>
<p>An “Affected Taxpayer” includes individuals who live, and businesses whose principal place of business is located in, the Covered Disaster Area. Affected Taxpayers are entitled to relief regardless of where the relinquished property or replacement property is located. Affected Taxpayers may choose either the General Postponement relief under Section 6 OR the Alternative relief under Section 17 of Rev. Proc. 2018-58. Taxpayers who do not meet the definition of Affected Taxpayers do not qualify for Section 6 General Postponement relief.</p>
<p>Option One: General Postponement under Section 6 of Rev. Proc. 2018-58 (Affected Taxpayers only). Any 45-day deadline or 180-day deadline (for either a forward or reverse exchange) that falls on or after the Disaster Date above is postponed to the General Postponement Date. The General Postponement applies regardless of the date the Relinquished Property was transferred (or the parked property acquired by the EAT) and is available to Affected Taxpayers regardless of whether their exchange began before or after the Disaster Date.</p>
<p>Option Two: Section 17 Alternative (Available to (1) Affected Taxpayers and (2) other taxpayers who have difficulty meeting the exchange deadlines because of the disaster. See Rev. Proc. 2018-58, Section 17 for conditions constituting “difficulty”). Option Two is only available if the relinquished property was transferred (or the parked property was acquired by the EAT) on or before the Disaster Date. Any 45-day or 180-day deadline that falls on or after the Disaster Date is extended to THE LONGER OF: (1) 120 days from such deadline; OR (2) the General Postponement Date. Note the date may not be extended beyond one year or the due date (including extensions) of the tax return for the year of the disposition of the relinquished property (typically, if an extension was filed, 9/15 for corporations and partnerships and 10/15 for other taxpayers). </p>
<p><br />
<a href="https://www.irs.gov/newsroom/irs-announces-tax-relief-for-victims-of-se…; title="IRS Announces Tax Relief for California Winter Storms 2023">Visit for full details on the tax relief.</a></p>
<p> </p>
<p><em>Details above provided by the Federation of Exchange Accommodators (FEA).</em></p>
<p> </p>
<p><em>Updated 10/16/2023.</em></p>
<p> </p>