<p>Denver, Colorado – November 3, 2015</p>

<p>Accruit, the nation’s leading provider of qualified intermediary (QI) services and 1031 like-kind exchange (LKE) program solutions, is pleased to announce the addition of Dan Green as director of technology and operations.</p>

<p>Dan is a technical leader with 18 years of experience in software development, Agile coaching, and change facilitation. He holds a Bachelor of Arts degree from the University of Colorado at Boulder, and he maintains the certification of Scrum Master, Certified Scaled Agile Framework Consultant, GE Six Sigma Green Belt, and GE Change Acceleration Process (CAP) Facilitator.</p>

<p>"We’re thrilled to have Dan on board.&nbsp; His broad technical experience and creative energy will further Accruit’s evolving strategy as a technology leader in the QI industry," said Chief Operating Officer, Karen Kemerling.</p>

<p>Dan will further Accruit's technology strategy for both software applications and the corresponding Microsoft Azure infrastructure environment, manage and evolve security compliance, and oversee technical third party partners.</p>

<p>When asked about his new role, Dan replied, "It's very exciting. I get to bring my passion for software leadership to a company dedicated to technology innovation in the industry. It’s a win-win."</p>

<p>No matter where you stand politically, there are certain things we can all agree upon, including the benefits of Section 1031 of the tax code.&nbsp; Section 1031 like-kind exchanges (LKEs) have been around since 1921, and, at their core, encourage continuity of investment - allowing asset owners to defer taxable gains into replacement assets rather than cashing out. From a planning and growth perspective, that’s particularly powerful as Section 1031 allows investors to follow opportunity - by moving their investments anywhere across the United States – without income tax penalty.</p>

<h2>Who benefits from Section 1031?</h2>

<p>Yes, ”The Donald” does benefit from 1031s, but so do ordinary American taxpayers, including rental property owners, farmers, collectors, rental car companies, construction contractors, and leasing companies.&nbsp; LKEs can be utilized by any taxpayer in any tax bracket and can significantly increase their cash flow.&nbsp; This increased cash is an effective economic stimulant, allowing asset owners to keep their money working in their businesses.</p>

<h2>We need more jobs.</h2>

<p>Both sides of the political spectrum say we need to create more jobs.&nbsp; Taken as a whole, the 1031 exchange process is job creation on steroids.&nbsp; Below is an example of Donald Trump saying “You’re hired” not “You’re fired” to an army of professionals.</p>

<p>Let’s say Trump receives an offer to buy one of his commercial real estate properties.&nbsp; Upon accepting the offer, a waterfall of events will take place:&nbsp;</p>

<ul>
<li>CPAs and attorneys will review the purchase and sale contract.&nbsp;</li>
<li>Inspectors will arrive to verify the property’s condition.</li>
<li>Settlement agents and attorneys will be engaged.</li>
<li>Improvements to the property will likely be made requiring contractors and materials.</li>
<li>Financing might be sought, requiring lenders and appraisers to be brought in.&nbsp;</li>
</ul>

<p>In this case, Trump’s interested in a like-kind exchange and will need to hire a qualified intermediary.&nbsp; The qualified intermediary will invest the funds at a bank and Mr. Trump will hire another broker to assist him in finding one or more replacement properties, triggering another team of professionals to facilitate the purchase.&nbsp; Finally, a team of accountants will be hired to file the final tax returns showing the positive impact of the LKE.</p>

<h2>Why would the government want to take away 1031?</h2>

<p>Some politicians believe that by taking away this section of the tax code, more tax dollars will be captured without impacting the investment/job creation process described above.&nbsp; Frankly, they are wrong and taking away this powerful tax deferment tool will discourage investment in American assets and in American workers.&nbsp; Why would Congress endanger the American economic environment during this fragile period?</p>

<h2>What can I do to save 1031?</h2>

<p>Please visit <a href="http://www.1031taxreform.com">www.1031taxreform.com</a&gt; for more facts and learn why this section of the tax code needs to be kept in place.&nbsp; Review the testimonials from average Americans who have benefited from this section of the code and please <a href="https://www.votervoice.net/FEA/campaigns/36117/respond">contact</a&gt; Congress to let them know you oppose the proposal to eliminate like-kind exchanges.</p>

<p>Photo:&nbsp; <a href="https://www.flickr.com/photos/gageskidmore/&quot; target="_blank">Gage Skidmore</a></p>

<p>A successful like-kind exchange (LKE) requires that there be both relinquished and replacement property.&nbsp; As such, equipment owners must actually sell old equipment and purchase new or used units as like-kind replacements.&nbsp; Another LKE requirement states the proceeds generated from the sale of the old (relinquished) assets must be subject to specific restrictions.&nbsp; These monetary restrictions are usually satisfied through employing a qualified intermediary (QI), whose responsibilities include safeguarding the sale proceeds until the replacement property is acquired.&nbsp; Found within Section 1031’s underlying restrictions and often referred to as the “g(6) restrictions,” these rules forbid the equipment owner from having any right to receive, pledge, borrow, or otherwise obtain the benefits from the sale proceeds residing in their like-kind exchange account.</p>

<p>Immediately after the sale transaction, the QI will typically receive the proceeds directly from the buyer.&nbsp; This deposit is usually net of various items, such as:</p>

<ul>
<li>Broker fees</li>
<li>Auctioneer costs</li>
<li>Debt payoffs/pay downs</li>
</ul>

<p>Generally, if the equipment owner were to receive any of the sale proceeds, or use it to pay off or pay down debt unrelated to the equipment being sold, the receipt could trigger a violation of the g(6) restrictions and possibly ruin the like-kind exchange.&nbsp;</p>

<p>For owner/operators, most equipment transactions are fairly simple and do not involve anything beyond pay offs or pay downs of debt related to the relinquished property.&nbsp; When the sale triggers a debt payment, it is a matter of instructing the broker, auctioneer, or buyer to send a portion of the purchase funds to the lender with any remaining amounts to be delivered to the qualified intermediary.&nbsp; However, there are cases where lenders (or lienholders) do not wish to receive payment related to the sale of the property.&nbsp; Instead, they seek to take hold of the proceeds or arrange for some sort of pledge against the funds held in the exchange account.&nbsp; While it’s understandable the lienholder would want to secure their interest in a traditional manner, these traditional arrangements would likely violate the terms of the g(6) restrictions and potentially taint the equipment owner’s like-kind exchange.</p>

<h2>What’s a Lender/Lienholder to do?</h2>

<p>In cases where the lienholder wishes to retain their secured interest, from sale of the relinquished property through the acquisition of the replacement property, there are three recommended techniques:</p>

<ul>
<li>The Standing Disbursement Instruction</li>
<li>The Irrevocable Right to Approve</li>
<li>A Pledge of Interest in a New Subsidiary</li>
</ul>

<p>Each technique may be done through adding specific language directly to the like-kind exchange agreement with your QI, or through a separate agreement.&nbsp;</p>

<h2>Standing Disbursement Instruction</h2>

<p>The standing disbursement instruction simply states that at the end of the exchange, any remaining exchange funds shall be paid to the lienholder, rather than back to the equipment owner. &nbsp;</p>

<h2>The Irrevocable Right to Approve</h2>

<p>The irrevocable right to approve method inserts the lienholder into the process for:</p>

<ul>
<li>Identifying replacement property and,</li>
<li>disbursing exchange funds for the acquisition of the replacement property.&nbsp;</li>
</ul>

<p>This method requires the lienholder physically sign any LKE identification forms and disbursement requests made of the quailified intermediary.</p>

<h2>A Pledge of Interest in a New Subsidiary</h2>

<p>A pledge of interest in a new subsidiary requires that the equipment owner, prior to the sale, transfer the relinquished property into a single member limited liability company (LLC).&nbsp; The lienholder then takes a pledge of this new LLC’s interests as security.&nbsp; After the sale of the old property the lienholder retains a secured interest in the LLC, with the LLC’s primary asset being the amount held by the Qualified Intermediary.</p>

<h2>Summary</h2>

<p>All three of the above methods may be used separately, or together to mitigate the lienholder’s security risks. &nbsp;After the acquisition of the replacement property, the lienholder may make standard arrangements to directly attach a lien on the replacement property.&nbsp; It is advisable that all parties seek the advice of an experienced tax attorney.&nbsp; Failure to address security concerns can be risky for the secured party, and failure to address these concerns correctly can be potentially invalidate the equipment owner’s like-kind exchange.</p>

<p>Denver, CO - October 8, 2015</p>

<p>Accruit, LLC, the nation’s leading provider of qualified intermediary (QI) services and 1031 <a href="https://www.accruit.com/glossary#Like-Kind_Exchange">like-kind exchange</a> (LKE) program solutions, is pleased to announce the addition of Paul Holloway as director of real estate exchange operations.</p>

<p>A veteran of the 1031 industry, Paul comes to Accruit from Land Title Exchange Corporation where, for 24 years, he led the 1031 tax deferred exchange program and held the roles of real estate closer, 1031 exchange specialist, and vice president of the exchange corporation. &nbsp;He holds a Bachelor of Science degree in Finance from the University of Northern Colorado as well as the&nbsp;<a href="https://www.accruit.com/glossary#Like-Kind_Exchange">like-kind exchange</a>&nbsp;industry’s Certified Exchange Specialist® (CES®) designation.</p>

<p>“Since 2011, we've focused on building out our real estate practice with some of the best in the industry. We're very excited about the leadership and the wealth of experience that Paul brings to the team," said President and CEO, Brent Abrahm.</p>

<p>At Accruit, Paul will focus on developing and maintaining relationships with brokers, attorneys and real estate-related partners in the Colorado area.&nbsp; Additionally, he will help educate and train the real estate community - including brokers, accountants and legal staff - on 1031 exchanges.&nbsp;</p>

<p>When asked about his new role at Accruit, Paul responded, "Educating real estate clients on the benefits of tax deferment has always been a passion of mine.&nbsp; At Accruit, I have the opportunity to expand on this passion by offering all types of 1031s, including reverse, build-to-suit, personal property and program exchanges."</p>

<p>Last week, I attended the Federation of Exchange Accommodators’ (FEA) annual conference, where it really struck home how impactful tax policy is for America.</p>

<p>The FEA is our nation’s only recognized association dedicated to education, proper conduct, and legislative representation for qualified intermediaries servicing IRC Section 1031 of the tax code, and as a sitting board member for over seven years, I am acutely aware of our membership’s activity levels.&nbsp; Activity levels that, in many ways, mirror our broader economy.&nbsp;</p>

<p>From 2009-2013, attendance was at an all-time low.&nbsp; Colleagues whose businesses prospered years earlier were experiencing a dramatic slowing in the number of 1031 transactions they facilitated. Taxpayers’ wealth in America was being depleted; asset values dropped to a fraction of past highs; and the need for deferring tax gains seemed less probable than a good, long rain in California.</p>

<h2>Fast Forward to 2015</h2>

<p>FEA attendance is not a leading economic indicator, but it very well could be.&nbsp; Attendance by qualified intermediaries in the last two years is up 20% year over year.&nbsp; Hotel blocks are being sold out, and qualified intermediary companies are growing.&nbsp; Why?&nbsp; Because since 1921 our country has provided a powerful tax strategy to encourage capital growth, expansion, and reinvestment back into the economy.&nbsp; This strategy – the use of 1031 like-kind exchanges - allows American businesses to rebuild what was ignored during the recession.&nbsp; With Section 1031’s wide economic impact, why Congress would even consider repealing such a stimulus baffles me.</p>

<p>The construction industries for homes, roads, buildings, and apartments are struggling to keep up with demand.&nbsp; New trucks, cars, planes, tractors, and cranes are all necessary to meet these demands, but the acquisition of these assets come with a significant cost.&nbsp; Companies are once again growing, reinvesting, and expanding, and 1031 like-kind exchanges provide an affordable pathway for the acquisition of these assets.&nbsp; 1031s literally help build America.</p>

<p>This is exciting and incredibly rewarding.&nbsp; Qualified intermediaries around the country serve the vital role of ensuring accuracy in fulfilling the 1031 requirements.&nbsp; Our customers rely on our knowledge to guide them as they make strategic decisions to grow their business, add employees, and redeploy their earned capital in the most effective manner.&nbsp; Having the immediate access to <strong>ALL</strong> of their earned capital after a divestment stimulates so many sectors of our economy. Section 1031 is the oil in our economic engine.&nbsp;</p>

<h2>Wide-Ranging Impact of 1031 Like-Kind Exchanges</h2>

<p>One of our clients recently sold an income-producing piece of real estate and has dreams of building a bigger facility.&nbsp; Using a 1031 exchange, they’ve decide to reinvest into a vacant piece of land.&nbsp; In the months after closing on the new land, architects were hired, roads were graded, permits were submitted, and surveying was completed.&nbsp; Extra capital was sought out while dozers prepared the land. Engineers are now engaged, and construction has started - bricks being laid, plumbing being routed, carpet being installed and paint being applied.&nbsp; Movers will soon deliver new equipment, desks, and supplies.&nbsp; Employees will be hired and, with the help of Section 1031, our client is realizing their vision.</p>

<p>Nobody should sit on the sidelines and allow 1031s be repealed.&nbsp; Recent economic studies by both <a href="/blog/1031-like-kind-exchange-impact-study-results-released">Ernst &amp; Young</a> and <a href="/blog/new-study-confirms-like-kind-exchanges-encourage-job-creation-and-stimulate-economic-growth">Ling &amp; Petrova</a> underscore the dramatic impacts to our economy should 1031s no longer be an option to businesses.&nbsp; As the next 15 months unfold, and we elect a new president and see changes in the Senate and the House, remember what drives our economy and your business.&nbsp; Tax policy that we can rely on, plan for, and grow in is what our economy needs to stay strong.</p>

<p>The <a href="http://www.1031.org/FEA/FEA_Event_Display.aspx?EventKey=CV15&quot; target="_blank">Federation of Exchange Accommodators (FEA) 2015 Annual Conference</a> takes place September 16-18 in Austin, Texas, providing a forum of learning, discussion and connection opportunities for qualified intermediary professionals.</p>

<p>Tax reform and the potential for the repeal of IRC Section 1031 will be the focus for the conference’s 100-minute keynote session, "View from the Hill," featuring:</p>

<ul>
<li>Robert Carroll, National Director of Ernst and Young's Quantitative Economics and Statistics (QUEST) practice and former Deputy Assistant Secretary of the Treasury for Tax Analysis</li>
</ul>

<ul>
<li>Dr. Milena Petrova, finance professor at Syracuse University’s Whitman School of Management and co-author of <a href="/blog/new-study-confirms-like-kind-exchanges-encourage-job-creation-and-stimulate-economic-growth">“The Economic Impact of Repealing or Limiting Section 1031 Like-Kind Exchanges in Real Estate”</a></li>
</ul>

<ul>
<li>William &amp; Jensen’s Vice President of Finance, David Franasiak, who will discuss the legislative landscape, tax reform forecast, and the ongoing progress of the FEA’s advocacy efforts.</li>
</ul>

<p>Accruit CEO and past president of the FEA , <a href="/users/brent-abrahm">Brent Abrahm</a>, along with his fellow co-chairs on the FEA’s Government Affairs Committee, will help moderate the panel discussion.</p>

<p>Read more about the <a href="/blog/new-study-confirms-like-kind-exchanges-encourage-job-creation-and-stimulate-economic-growth">Ling-Petrova Microeconomic Study</a> on the impact of repealing Section 1031 and the <a href="/blog/1031-like-kind-exchange-impact-study-results-released">Ernst &amp; Young Macroeconomic Study</a> released earlier this year, and get the <a href="http://www.1031.org/FEA/FEA_Event_Display.aspx?EventKey=CV15&quot; target="_blank">program details for the FEA 2015 Annual Conference</a>.</p>

<p>_{Photo of "View from the Hill" panel:&nbsp; (left to right) Brent Abrahm, Dr. Milena Petrova,&nbsp; David Franasiak, Max Hansen (American Exchange), Suzanne Goldstein Baker (IPX), Dr. Robert Carroll}</p>