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What
makes a Qualified Intermediary
'Qualified'?
This is a trick question, with
two answers.
1.
The I.R.S. answer: technically,
nothing! In the IRS regulations,
a "qualified" intermediary is
anyone who is not "disqualified."
You are disqualified if you have
acted as the employee, attorney,
banker, broker, or real estate
agent for an exchanger within
the past two years, or if you
are related to the exchanger.
An entity (like a corporation)
is disqualified if any disqualified
person owns more than 10% of that
entity.
2.
The Experts' answer:
In the general sense, you should
insist that your Qualified Intermediary
actually have some qualifications!
Since the IRS sets no standards,
it is up to you to choose a Q.I.
with expertise, integrity, and
experience. Here are some criteria
you can use to select a truly
QUALIFIED intermediary:
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•
Will your exchange be handled
by licensed professionals
(like CPAs and attorneys)? |
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•
Is your Q.I. available to
you to answer your questions
throughout the exchange, no
matter how complex? |
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•
Will your Q.I. defend your
exchange if it is audited? |
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•
Is the Q.I. bonded? |
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•
How will the Q.I. hold your
exchange funds? Will the Q.I.
give you honest and direct
access to view your account
balance? |
In
short, anyone CAN
be someone's QI, but not just
anyone SHOULD
be your QI.
--The
Experts
TEE-Shots
are Tips
from the Exchange
Experts
that are designed to make you think about, and ask questions about, the 1031 exchange process.
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