IRS clamp-down on QIs...

The IRS's list of QIs...

Every year, the IRS considers revisions to their tax forms. Among these is Form 8824 (the form that you attach to your tax return to report your 1031 exchange).

One of the major changes they are considering is to require the exchanger to include the name and address of your qualified intermediary. Qualified Intermediaries are not regulated by the IRS or any of the 50 states. As a result, there are some less-than-reputable intermediaries out there. The change to the 8824 will allow the IRS to begin to build a data base of intermediaries. Then, if they catch the intermediary stretching or abusing the rules, they have a list of all the client’s whose exchanges they’ve handled.

Make sure that you pick your intermediary carefully. Even if they handle your exchange correctly, you may find yourself audited down the road because of abuses with other clients.

--The Experts