2012 Reviewed and Changes for 2013
There have been numerous developments related to IRC Section 1031 during 2012. In addition, significant tax law changes are slated to take effect beginning in 2013, although there is great uncertainly as to which changes will be implemented and which will be avoided.
Asset Preservation has prepared a useful short and succinct summary of the significant developments concerning Section 1031 exchanges in 2012. To read about these developments, along with a short summary of the issues involved, click here to see 2012 Reviewed and Changes for 2013.
If you would prefer to access the text of the Private Letter Rulings and other developments directly without Asset Preservation’s synopsis, click directly on the links below:
RECENT LEGAL DEVELOPMENTS
PLR 201216007 (Related Parties)
PLR 201220012 (Related Parties)
PLR 201242003 (Reverse Exchange with Multiple Related Parties Selling)
Reesink v. Commisssioner; T.C. Memo 2012-118 (Conversion of a Rental into a Personal Residence)
ILM 201238027 (Conflicts in Classifications of Real and Personal Property Where State Law Conflicts)
Temporary Regulations Regarding Capitalization of Exchange Fees
Wo Yee Hing Realty, Corp. v. Stern (2012 NY Slip Op. 05792) (Failed Exchange)
Redding v. Montana First Judicial District Court, 2012 WL 2628053 (Supreme Court of Montana, 2012): (TIC Replacement Property Determined to be a Security)
Click here for the full text of 2012 Reviewed and Changes for 2013.
IRS Provides Tax Relief to Victims of Hurricane Sandy
RETURN FILING AND TAX PAYMENT DEADLINE EXTENDED TO FEB. 1, 2013
Certain taxpayers may qualify for postponement of the exchange deadlines in Section 1031 if the relinquished or replacement property is located in a Presidentially declared disaster area, or if the principal place of business of a party to the transaction is located in a covered disaster area. Taxpayers can also qualify by satisfying other criteria. In the aftermath of Hurricane Sandy, the Internal Revenue Service announced IRS filing and payment relief applies to the following localities:
- In Connecticut (starting Oct. 27): Fairfield, Middlesex, New Haven, and New London Counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County;
- In New Jersey (starting Oct. 26): Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean, Somerset and Union;
- In New York (starting Oct. 27): Bronx, Kings, Nassau, New York, Queens, Richmond, Rockland, Suffolk and Westchester.
For updates or more information, Visit the Tax Relief to Vicitims of Hurricane Sandy webpage.
Parking the Replacement Property (Reverse ‘Exchange Last’ Format)
Asset Preservation, Inc. (API) has an experienced team in our Commercial Division with many years of expertise and experience handling technical “Parking Arrangements” also described as a reverse exchanges. When a 1031 exchange requires the purchase of a replacement property before the sale of the relinquished property, a reverse exchange is the solution. The IRS released Revenue Procedure 2000-37 which provides a “safe harbor” for exchangers to perform a reverse exchange.
Click here to learn more about Reverse Exchanges.
For questions about reverse exchanges, email API’s Reverse Department at firstname.lastname@example.org.
Information for Exchangers Selling From Oct. 18 – Dec. 31, 2012
An exchanger must complete the acquisition of a replacement property in a 1031 exchange ends at midnight on the earlier of the 180th day after the date the relinquished property was transferred, or the due date (including extensions) for the income tax return for the taxable year in which the transfer of the relinquished property occurs. (U.S. Treasury Regulations section 1.1031(k)-1(b)(2)).
Even though an exchanger may be entitled to a tax extension, they must actually file IRS Form 4868 with the IRS to obtain the tax extension. Consequently, some exchangers closing late in 2012 may need to file for an extension to have the benefit of the entire 180-day exchange period. As a general rule, exchangers should not file a 2012 Federal Income Tax return until the 1031 exchange is complete.
More specifically, if the 180th day following the closing of the first relinquished property falls after the due date for filing the 2012 tax return (generally April 15, 2013 for individuals), an exchanger must file IRS Form 4868 with the IRS to actually extend the filing date. If an exchanger does not file for such an extension, they will not be able to acquire any replacement property in an exchange after the tax return due date.
Top 10 Recovering Markets in the U.S.
The national median list prices of houses for sale increased 2.54% in the 3rd quarter of 2012 compared to the same time period in 2011. Click here to see the following top ten recovering markets, based on increases in median listing prices, employment and inventory.
For the full text of this article, Read more…
When to Pay the Piper (and how much will he charge)?
By Jon Christianson, Esq., JD, LLM Tax
Tax rates on capital gains are scheduled to increase in 2013 if Congress fails to extend the current rates. Should I pay my tax now or take a wait and see approach with a 1031 exchange?
For the full article on When to Pay the Piper (and how much will he charge)?, read more…