Of all the lingo related to 1031 exchanges, one of the most unfamiliar is a Starker exchange. In this episode of his popular blogcast series, David Moore explains everything and includes an interesting back story too.
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Today we’re talking with David Moore, Co-Founder of Equity Advantage, a firm that specializes in tax-deferred investments; in particular, IRS Section 1031 exchanges.
David, what is a Starker exchange?
David Moore: Well, a Starker exchange is just a common delayed exchange in today’s world. The funny thing is that the Starker case, if you looked at Section 1031, it came to be in the 20s. The Starker family, actually out of Oregon, so it’s close to our heart here, but they had a transaction in the late 60s that they closed and they utilized an exchange. And it was ultimately challenged and it worked its way through the courts in the mid-late 70s, and finally settled in ’79.
And so a lot of people call the exchange a Starker exchange, not as many today as they did previously. And the reason we in the industry don’t like to refer to it as a Starker exchange these days, is that one of the early companies in the business was founded by a very close friend of mine, actually a co-founder of this firm. And he had started a company called Starker Services. And, of course, we don’t want to give them credit for it. And he graciously accepted credit for it many times for that thing and people would call up and say, “Gee, thank you so much.” And the company absolutely had nothing to do with the case or anything; he just knew a great name so he used it.
But in today’s world, like I said, a Starker exchange is just the everyday, 1031 tax deferred-exchange; a delayed exchange for practical purposes.
When do your clients normally use a Starker exchange?
David Moore: Well, they should use it any time they’re selling an investment property they’ve got a gain on. So typically, it could be, and we’re talking investment property, but it could be anything used for productive use of trade, business, or for investment.
So primarily, people think of Starker exchanges or 1031 exchanges when they’re applied to real property. But in reality, they can be applied to everything from businesses, you got livestock, where the like kind requirements are obviously a lot different. But cars, art work, all kinds of things; anything that you’re going to realize that long-term, or it could be short-term capital gain on disposition of, you can utilize a 1031 exchange process or Starker exchange, as it so often used to be referenced as.
Thank you, David. Listeners may call 503-635-1031, or can visit 1031exchange.com for more information.
Although it turns out that a Starker Exchange is just a delayed 1031 exchange by any other name, it helps to have an expert like David Moore to set you straight. You can count on David and the entire team at Equity Advantage to steer you the right way. Call to get started today!