User talk:Mike Anderson

From TaxAlmanac

1031 help

I too am having trouble w/ a 1031 exchange. Hoping you can help.

Based on the 1031cpa's website worksheets I computed the 8824 deferred gains and new property basis, which seems to work fine.

However, my balance sheet is off apparently by the additional cash paid for the new property less the FMV of new property in excess of the price of the old property. For example, on the balance sheet, cost basis increases by from $146,000 to $240,000 pursuant to the worksheet. However, in order to make the balance sheet work, I would have to either credit (increase) my liabilities or capital account by $42,000.

My new basis consists of $44,000 of carryover basis, $45,000 of exchange expenses and $47,000 of additional cash paid.

Did I miss something?

Hi there, whoever you are,

I can't say I have a complete knowledge in matters of 1031 exchanges (though my own exchange has given me plenty of excercise) so you may have to go to a real CPA for advice. I called up Larry Jensen at 1031cpas.com the other day and he seems friendly and knowledgeable, but I think even he has limitations: I had a long email dialogue with him before I posted my first question to TaxAlmanac and it was as though he didn't understand my situation or reasoning, and he never answered my question (similar to yours) to my satisfaction. The worksheets and methods I am using now are a conservative combination of Larry Jensen's and others as I saw fit. I may be able to forward you some alternative worksheets, if you like.

I'm not certain what you mean by "balance sheet." Which items do you expect to add up to which other items? Is your balance sheet is off by [additional equity] - [FMV, replacement - FMV, relinquished]? In my case, the difference between the two methods of calculating basis (described here http://www.taxalmanac.org/index.php/Discussion:Three_questions_from_my_1031_exchange) were off by [additional equity] - [FMV, replacement - FMV, relinquished] + [liabilities, replacement - liabilities, relinquished], and after a little substituition of terms I learned this amount was equal to [exchange expenses, relinquished] + [exchange proceeds toward exchange expenses] - [interest on exchange proceeds] + [tax proration, relinquished] in my case. I never fully resolved this descrepancy; I just used a different worksheet that did not rely on the difference in fair market value between the relinquished and replacement properties. The 1031cpas.com worksheet was the only one I found which uses difference in FMV only to calculate basis. The 1031exchangeservices.net worksheet uses difference in debt and also difference in FMV as a crosscheck (a crosscheck that fails in my case), and two other worksheets I found use only difference in debt.

Mike Anderson 16:33, 31 March 2006 (CST)