1031 Exchange Qualified Intermediary Daily Activity

Posted by Andy Gustafson on Tue, Jun 17, 2014

As a Qualified Intermediary (QI) of 1031 exchanges since 2003, accommodating simple and complex, real and personal property exchanges each 1031 exchange requires a fundamental awareness for the rules and regulations and particularly the exceptions.  Inquiries either email or office calls, are received daily asking questions regarding an exchange under consideration or for a 1031 exchange already underway either by Atlas 1031 Exchange or another QI. Those considering a 1031 exchange will ask a number of questions regarding procedures for both a forward and reverse exchange.

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Tags: qualified intermediary

Qualified Intermediary Negligence Part II

Posted by Andy Gustafson on Thu, Sep 26, 2013

In 1031 exchange Tax Court case Kreisers vs First Dakota Title Limited, the Plaintiffs wished to relinquish a former office building and construct a new one. Plaintiffs had no special knowledge of real estate transactions or Section 1031 Exchanges, though they were aware that structuring their planned transactions as a Section 1031 Exchange would be beneficial from a tax standpoint.

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Tags: qualified intermediary

Qualified Intermediary Negligence Part I

Posted by Andy Gustafson on Mon, Sep 23, 2013

A taxpayer who wishes to avoid paying capital gains taxes on the sale of real property may choose to enter into a Section 1031 Exchange transaction in lieu of a traditional sale. A transaction that meets all of the requirements for a Section 1031 Exchange will result in a deferral of federal and state capital gains and depreciation recapture tax that would otherwise be due on the realized gain. To qualify for Section 1031 treatment a transaction must meet several requirements or rules.

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Tags: qualified intermediary

1031 Exchange Accommodator

Posted by Andy Gustafson on Mon, Aug 12, 2013

The role of the 1031 Exchange Accommodator otherwise known as a Qualified Intermediary, or QI, is to facilitate Internal Revenue Service (IRS) Code Section 1031 exchanges. The Regulations created four safe harbors for the purpose of determining whether or not the taxpayer has actual or constructive receipt of money or property while engaged in a 1031 exchange. Given the 1031 exchange utilizes one of the four safe harbors, the exchange will not be challenged by the IRS from the perspective of constructive receipt.

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Tags: qualified intermediary

1031 Qualified Intermediary Role

Posted by Andy Gustafson on Thu, Mar 14, 2013

An Internal Revenue Code section 1031 exchange allows for the deferment of capital gains taxes on the exchange of "like kind" property that is held for use in trade, business or investment. For example, if a rental property owner is moving and would like to sell his rental property in his current location, he can use the funds to buy new rental property in his new location, he could use a 1031 exchange to defer paying capital gains taxes on any appreciation in value the property experienced. If the property had depreciated and is selling for less than the purchase price, a 1031 exchange would defer the loss. If not all the funds are used to purchase the new property as in a partial 1031 exchange they will be taxed. "Like kind" property means that the properties exchanged are of the same nature or character. Foreign property is not considered "like kind" to property in the United States. Certain items, such as primary residence, inventory, partnership interests, indebtedness and stocks are explicitly ineligible for 1031 consideration.

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Tags: qualified intermediary

Nevada, Oregon, Virginia and Washington 1031 Exchange State Laws

Posted by Andy Gustafson on Wed, Dec 26, 2012

Eight states have legislated 1031 exchange laws that require the Qualified Intermediary (QI) accommodating the tax deferred exchange to follow or face criminal or civil penalties. The laws serve to protect taxpayer exchange proceeds, establish QI safeguards and procedures to alert the taxpayer of QI changes in ownership. Sanctioned by the Treasury Department and enforced by the Internal Revenue Service, the 1031 exchange allows taxpayers both domestic and foreign to defer federal and state capital gains and recaptured depreciation taxes when property held for the productive use in a business or investment is exchanged solely, for property held for productive use in a business or investment.

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Tags: QI state laws, qualified intermediary

California, Colorado, Idaho and Maine 1031 Exchange State Laws

Posted by Andy Gustafson on Thu, Dec 20, 2012

1031 exchange laws have been passed in eight states requiring Qualified Intermediaries to follow specific procedures to protect the exchange proceeds of their residents engaged in a 1031 tax deferred exchange. A 1031 exchange is a Section of the Treasury and IRS Regulations that provides taxpayers a tax deferral on the federal capital gains and recaptured depreciation tax when real or personal property held for investment or in a business is sold and replaced with like-kind property. A Qualified Intermediary (QI) is the third party who accommodates the exchange, providing documentation in accordance with the Treasury and IRS requirements and holding the exchange proceeds. States also recognize the federal statute allowing the taxpayer to defer state capital gains taxes if applicable.

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Tags: QI state laws, qualified intermediary

1031 Exchange Qualified Intermediary

Posted by Andy Gustafson on Thu, Oct 04, 2012

The 1031 exchange Qualified Intermediary (QI) was one of four safe harbors the 1031 Regulations created in 1991 for use in a 1031 exchange to fulfill the requirement that the taxpayer is not in actual or constructive receipt of exchange funds or property as part of a 1031 exchange. If it is determined that the taxpayer has or had access to the funds during the exchange, the 1031 exchange may very well be nullified and taxes deferred due. A QI under Safe Harbor Number 3 is not recognized as the taxpayer’s agent for purposes of the 1031 exchange.

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Tags: forward 1031 exchange, qualified intermediary

1031 Exchange Safe Harbor: Qualified Escrow and Qualified Intermediary

Posted by Andy Gustafson on Mon, Jun 11, 2012

In 1991, the Department of Treasury published regulations creating four safe harbors defining conditions and constraints to determine whether the taxpayer is in actual or constructive receipt of money or other property for the intent of Internal Revenue Code (IRC) § 1031. IRC Section 1031 states “no gain or loss is recognized when property held for productive use in a trade, business or investment is exchanged for property held for productive use in a trade, business or investment.” The outcome of the code allows taxpayers to defer the capital gain and recaptured depreciation taxes for real and personal property held for use in a business or investment.

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Tags: 1031 exchange, qualified intermediary, Qualified Escrow Account

Qualified Intermediary 1031

Posted by Andy Gustafson on Thu, Jun 07, 2012

A Qualified Intermediary of 1031 tax deferred exchanges was instituted by the Internal Revenue Service and Department of Treasury in 1991 as one of four safe harbors to eliminate problems associated with taxpayers having access or control to their exchange proceeds. “A Qualified Intermediary under Safe Harbor No. 3 is not considered the agent of the taxpayer for purposes of a tax-deferred exchange. The taxpayer’s transfer of relinquished property and subsequent receipt of like-kind property is treated as an exchange and the determination of whether or not the taxpayer is in actual or constructive receipt of money or other property before the taxpayer actually receives like-kind replacement property is made as if the QI is not the agent of the taxpayer.” [1]

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Tags: Escrow and Title, 1031 exchange rules, qualified intermediary

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