Discussion:1031 Complications/Form Vs. Substance
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Discussion Forum Index --> Advanced Tax Questions --> 1031 Complications/Form Vs. Substance
Discussion Forum Index --> Tax Questions --> 1031 Complications/Form Vs. Substance
Death&Taxes (talk|edits) said: | 8 May 2009 |
| Last April violinist/client was approached by instrument dealer who said he had a buyer for her piece. She paid 250K in 2003; he says it is worth 325K and he has a buyer, and suggests she trade it. She tells him she'd trade it, and pay the difference for an instrument made in 1660, which the dealer does not have. Dealer says he knows someone who might sell, and learns that the price will be 350K. 25K will be the difference she must put up. They put this in writing but now it gets hairy.
He wants her fiddle now, and will give her 150K of cash plus another fiddle worth 175K, which they orally agree she will return, along with the 150K he's given her plus the 25K difference when he has the 1660 fiddle. All comes to pass, and within two months, so that she returns the 150K plus 25K of cash and the borrowed instrument to him. He acknowledges in writing the return of the borrowed instrument and the 25K and gives her a receipt for 350K for the 1660 instrument. Original paperwork says nothing about the 150K cash paid out or the interim instrument. One or two transactions? Did she trade down and then trade up. | |
| 8 May 2009 | |
| fiddle-dee-dee
accepting the cash messed up a 1031 I believe unless she used a QI | |
Death&Taxes (talk|edits) said: | 8 May 2009 |
| In theory the instrument dealer was the QI, but he did her a disservice to make a deal with someone else. I suspect that he acquired the middle instrument and the cash to give her from the person who wanted her instrument. The funny world of string instruments; so little in writing, so much with the shake of a hand. | |
| 8 May 2009 | |
| I don't know, the fact that she received boot on trade 1 then gave up boot on trade 2 looks like a tax deal-breaker. someone else should have held the boot | |
| 8 May 2009 | |
| The boot received is a taxable transaction.
I don't see who the QI was. The dealer was in it for himself. | |
| 10 May 2009 | |
| The first transaction was not really a sale or exchange. Instead, it was merely a loan of money and property. | |
