TEE-Shots Newsletter

Tue
31
Jul

New IRS ruling relating to related parties...

The IRS recently issued a ruling concerning related-party 1031 exchanges (PLR 200728008). This transaction occurs when a 1031 exchanger either sells to or buys from a family member or his business entity. The most conservative approach is to ensure that both the exchanger and the related-party both end up with property, and neither ends up with cash.

Wed
18
Jul

New Vacation Home Ruling...

While vacation or second homes have generally been treated as investment property, a Tax Court case released last month is a text book case on how to have your vacation home exchange disallowed.

This taxpayer had two major problems:

Fri
01
Jun

Can I TRUST my QI...?

One of the things I used to tell my clients when I had my CPA practice is you never get ripped off by people you DON’T trust. What I mean is, after a high profile fraud case, you never hear the victims say, “I just KNEW he was going to rip me off!” Instead, the victim usually says something like “I can’t believe this happened," or, "I never saw it coming...."

Thu
17
May

Can I FIRE my QI...?

Recently, there has been a spate of high-profile Qualified Intermediaries, or 'QIs,' facing financial problems, including bankruptcies, lawsuits and possible federal actions.

As a result, other QIs who are reputable and have safeguards in place to protect client funds (like 1031 Exchange Experts) have been receiving calls from clients of other QIs seeking to move their funds and switch 1031 exchange companies.

So, the question arises . . . can you do this legally? Unfortunately, the answer is probably not. But keep reading; maybe you can....

Fri
27
Apr

Forbes tells about reckless QI....

Another Intermediary takes off with the money

As many of you know, we are constantly harping on the importance of keeping clients' funds in segregated accounts. Now, in the April 23 edition of Forbes Magazine, there's a yet another example of what we've been talking about.

Mon
23
Apr

Is it worth doing a 1031 on small exchanges...?

I’m selling a property for $25,000; is it worth doing a 1031 on something this small?

Depends on the situation. The lowest exchange I can remember us doing was an $18,000 parcel. Just eighteen thousand! But some situations do call for it.

Fri
30
Mar

IRS Challenges a State's Definition of "Real Estate..."

A recent Tax Court case could dramatically impact the exchange of 1) pre-construction contracts, and 2) purchase and sale contracts. In the past, it was common for taxpayers to do a 1031 exchange on a contract if their state defined that type of contract as "real estate."

Thu
22
Mar

QI as an Expert Witness....

YOU MAY WANT TO FORWARD THIS TO YOUR ATTORNEY...

A 1031 QI (Qualified Intermediary) serves many functions: an officially sanctioned entity to hold the proceeds of a 1031 exchange; a 'trail guide' to help you through the process; an advocate if the IRS challenges your exchange; a guardian to protect your funds while being held for the exchange.

Fri
09
Mar

Can I exchange a Fix-n-Flip...?

In short, probably not. Some people do 1031 exchanges on fix-n-flips, but it's risky.

So: why are they risky? The answer has to do with INTENT. §1031 of the Internal Revenue Code specifically EXCLUDES property that is “held primarily for sale” from a 1031 exchange.

Fri
09
Feb

Does the debt have to equal...?

Of all the misconceptions about 1031 exchanges, this has to be the most common. We hear it from accountants, clients, attorneys, financial publications and many other sources. The frightening thing is that we even hear it from other intermediaries as well! In fact, it was even printed in a brochure of one of the largest QIs in the country!

In case you have any doubt, let us clarify: The IRS does not care what your debt is on your Old or New Property. With regard to the financial aspects of your exchange, they are primarily concerned with two things:

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