Discussion:1031 Gains
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Discussion Forum Index --> Basic Tax Questions --> 1031 Gains
Discussion Forum Index --> Tax Questions --> 1031 Gains
| 18 June 2008 | |
| Client sold a property 12/25/07 to a buyer.
Parked the money by a QI and identified within 45 days other like kind property. Did not end up buying like kind property. Does he recognize the capital gain in 2007 (date of Sale) or 2008 (after the 180 days)? Help. | |
| 18 June 2008 | |
| If all the elements of the deferred exchange were in place so TP did not
have access to the funds until after the 180 days, Section 453 would apply and the gain should be reported under the installment method. Gain is recognized in 2008 (less recapture and 2007 net boot received to be reported in 2007). | |
| 18 June 2008 | |
| So.....
Cost Basis 2005= $100k Sale Price on 12/25/07 for $150k (money held in QI Escrow toll 06/06/08) Depreciation recapture of ....say $10k. When is this recognized? When is the LTCG of $50k recognized? | |
DouglasHolbrook (talk|edits) said: | 18 June 2008 |
| Actually, the gain can be recognized in 2007 or 2008. You can use the installment method which would make the gain recognized in 2008 or elect out of the method and recognize it in the year of sale (2007) | |
| 19 June 2008 | |
| Douglas is correct. But the installment method is
the default unless an election out is made. The depreciation recapture is recognized in 2006, it cannot be deferred under installment method. | |
