Discussion:1031 Exchange & Installment Sale
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Discussion Forum Index --> Advanced Tax Questions --> 1031 Exchange & Installment Sale
Discussion Forum Index --> Tax Questions --> 1031 Exchange & Installment Sale
| 7 December 2007 | |
| Hello all,
A client, partnership of 14 individuals, is considering combining 1031 exchange with installment sale of investment real property. Can this actually be accomplished and if yes how is it reported on tax return? Also, what happens if some partners want their share of proceeds in cash and dont want to invest in replacement property? Any guidance is greatly appreciated. | |
| 7 December 2007 | |
| Convert the interests of those partners that want to cash out to a TIC interest in the property prior to selling. The TIC interests 'partners' will cash out their interest in the property at sale.
The partners that want to go through with the exchange will stay as partners in the partnership. The partnership will then exchange out of it's interest in the property at sale. (Credits to Jessica from another thread.) | |
| 8 December 2007 | |
| Sashka just for your information - Be aware that the IRS will be putting more " Sec.1031 excanges" under its microscope. The Treasury Inspector General has issued a new report, Like-Kind Exchanges Require Oversignt to Ensure Taxpayer Compliance. (TIG Ref.No.2007-30-172, 9/17/07). The new report points out perceived abuses in this area and the need to meet all the tax law requirements. | |
| 8 December 2007 | |
| The Tax Court held that a transfer of partnership property to the partners as tenants and common immediately before the exchange results in failed exchange. See CHASE v. COMMISSIONER, 92 TC 874. | |
| 8 December 2007 | |
| Good point, Riley2. That particular case did have some significant problems with the liquidation of the partnership interest's followed by an exchange of those liquidated interests. That is a great example of how not to do it. | |
| 8 December 2007 | |
| I have wondered if the partnershipship can do the exchange, receive boot, distribute cash to some partners and allocate the gain on the boot to the partners who received the cash?
I also recall hear that in order for a TIC interest to qualify for an exchange the activity must have always been reported seperately by the various owners. | |
| 8 December 2007 | |
| You can recognize the gain on an exchange under the installment method. | |
| 8 April 2008 | |
| In my senario. The Taxpayer did not reinvest all the proceeds so he has a gain. However the 180 day period and constructive receipt of the cash took place March 31, 2008. Do I need to report the Form 8824 (Like Kind) and the 6252 (installment sale) for 2007? Or do I just report the 6252 installment sale?
Thanks in advance for your contributions. TW | |
