New Threats to Section 1031 Like-Kind Exchanges
In our almost 30 years of time in the 1031 Exchange business we have had at least a half dozen serious attacks on Section 1031’s existence. Although the 1031 Exchange has been in existence for almost 100 Years, it is once again in jeopardy! There is a serious possibility of a major change in power in the federal government after this Fall’s election, and with this change we are hearing proposals that could almost double Capital Gain’s Tax Rates, eliminate the Step-Up in Basis and remove Section 1031 Exchange…
FEA Leadership and GAC are very aware the presumptive Democrat Presidential nominee, Joe Biden, has a tax plan that will eliminate many “tax loopholes.” Section 1031 is targeted to be eliminated as an unnecessary “tax loophole” in the Biden Administration’s tax proposal. If this were to happen, the 1031 exchange and the corresponding industry would cease to exist! As further information becomes available we will be distributing it, but in the meantime please be alert to possible changes and do your best to inform clients and fellow professionals of the possible upcoming changes.
Every few years we hear how an election is potentially the “most important ever” and guess what? This time it may actually be true. This is the time to make a difference!
Best of health to all!
45 and 180 Day Extensions for Disaster Areas in South Carolina, Tennessee, and Mississippi
The IRS has issued an extension for storms for Section 1031 deadlines falling on or after April 12, 2020 in the following counties. Note the extension date in the Notice is October 15 th, so that might be longer than 120 days in some cases.
South Carolina: The IRS has issued an extension for Aiken, Barnwell, Berkeley, Colleton, Hampton, Marlboro, Oconee, Orangeburg and Pickens counties beginning April 12, 2020.
Tennessee: Bradley and Hamilton.
Mississippi: Clarke, Covington, Grenada, Jasper, Jefferson Davis, Jones, Lawrence, Panola and Walthall.
The Disaster Date is in bold. Listed counties are the “Covered Disaster Area”. [Please check the IRS disaster website periodically at the address listed below for updates because the FEA does not send out notices for each disaster or for counties added to ongoing disaster extensions.]
Both of the following criteria must be met to get the extension under Revenue Procedure 2018-58, section 17:
(1) The taxpayer is located in the Covered Disaster Area or is otherwise an affected taxpayer as defined in the Notice, regardless of where the relinquished property or replacement property is located, or otherwise has difficulty meeting the exchange deadlines under the conditions in Revenue Procedure 2018-58, section 17; AND
(2) The relinquished property was transferred (or the parked property was acquired by the EAT in a reverse exchange under Revenue Procedure 2018-58) on or before the Disaster Date listed in the Notice. Note that some disasters occur on a single date; others, such as flooding, occur over a period of days and the Disaster Date above is preceded by beginning.
IF the taxpayer meets these criteria, THEN any 45-day or 180-day deadline that falls on or after the disaster date is extended to THE LONGER OF: (1) 120 days from such deadline; OR (2) the extension date listed in the Notice [ which is October 15, 2020]. Note the date may not be extended beyond one year or the due date (including extensions) of the tax return for the year of the disposition of the relinquished property (typically, if an extension was filed, 9/15 for corporations and partnerships and 10/15 for other taxpayers).
For more information head online to https://conta.cc/321fgEt
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