Accommodating 1031 Exchanges in Domestic and International Markets
We also serve those taxpayers in states where the Qualified Intermediary is required to maintain a $250,000 Errors and Omissions insurance policy and the use of a qualified escrow account or have a $1,000,000 Fidelity Bond or a qualified escrow account requiring two signatures to remove exchange funds, one from the Exchangor and one from the Qualified Intermediary. The current states with state legislated requirements include California, Oregon, Washington, Idaho, Nevada, Colorado, Virginia and Maine.
Section 7701 defines the borders of the United States as all fifty states and the District of Columbia. For purposes of the 1031 code, the Internal Revenue Service defined the borders of the U.S. to include the U.S. Virgin Islands given the Exchangor is: (1) A citizen or resident of the United States and (2) Has income derived from sources within the U.S. Virgin Islands, is effectively connected to the performance of a trade or business in the U.S. Virgin Island or files a joint return with an individual who derives an income or is connected to a trade or business within the U.S. Virgin Islands. Both requirements must be satisfied to exchange real property in the fifty states and real property located in the U.S. Virgin Islands. Puerto Rico is not eligible for 1031 eligibility while real property located in Guam is eligible.