Taxpayer Uses Disqualified Person as a Qualified Intermediary (QI)
In Blangiardo v. Commissioner, T.C. Memo. 2014-110, the taxpayer hired his son to serve as his intermediary. The taxpayer duly reinvested the exchange proceeds into like-kind replacement property in accordance with the 1031 exchange requirements.
The taxpayer’s position was that his exchange should have been valid, with his son as intermediary, because his son was an attorney, the exchange proceeds from the sale of the relinquished property were held in an attorney trust account, and the documents involved refer to the transaction as a 1031 exchange.
The Court did not accept these arguments of Mr. Blangiardo. The 1031 exchange requirements are very specific regarding who can be a qualified intermediary. Neither the taxpayer nor anyone considered a Disqualified Person can function as a qualified intermediary. The definition of "disqualified person," set forth in Reg. 1.1031(k)-1(k)(3), is very explicit, and a lineal descendant, such as a son or daughter, is specifically disqualified from being an intermediary, regardless of his or her profession.
Real estate investors and their advisors should keep in mind that there is also a broader category of people and entities that are considered disqualified persons and this includes anyone who is considered an agent of the taxpayer. An agent of the taxpayer includes a person who has acted as the taxpayer’s employee, attorney, accountant, investment banker or broker, or real estate agent or broker within the 2-year period ending on the transfer of the relinquished property, with certain exceptions. Learn more about Understanding the Role of Qualified Intermediary and The Definition of a Disqualified Person.
Asset Preservation’s Joan Poimiroo Retires
Joan Poimiroo, Senior Vice President of Asset Preservation, Inc. (API) retires this month after more than 20 years of service. She joined API in 1993, just three years after it was founded.
“Joan has helped create and shape the API everyone knows today, what we consider the best 1031 company in the nation,” says API President Javier Vande Steeg. “During her long career, she has impressed thousands of tax professionals, attorneys, escrow professionals and clients alike.”
Colleagues recognize Joan for thoroughness and attention to detail, but say that her trademark is staying calm under pressure and being patient with clients. “I truly believe that Joan has a special gift of imparting sincerity and care to everyone she works with,” Javier adds.
API is grateful for her many years of service, and wish her well in the years to come! Joan and her husband plan to spend their retirement catching up on traveling.
“She will have a special place at API forever,” Javier says. “Cheers, Joan – what a magnificent performance over these past 21 years!"
1031 Basics: Contract Language
Although many exchangers include language in their Purchase and Sale Agreements establishing their intent to perform an exchange, it is not required by Section 1031. It is important, however, that the Purchase and Sale Agreements for both the relinquished and replacement property are assignable.
Learn more about 1031 Exchange Contract Language.
IRS Adopts “Taxpayer Bill of Rights”
The Internal Revenue Service this week announced the adoption of a “Taxpayer Bill of Rights.” The Taxpayer Bill of Rights takes the multiple existing rights embedded in the tax code and groups them into 10 broad categories, making them more visible and easier for taxpayers to find. Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. Explore your rights and our obligations to protect them. Read More…
Top 10 Metros with Highest Rent Growth in May
According to Axiometrics, Odessa, Texas led in May as the number 1 rent growth metro area in the United States with a 13.2% increase in rents. To read about the other top 10 markets, Read More…
We Need Your Help. Tell Congress Not to Repeal 1031 Exchanges.
Congress is debating tax reform, and they are seriously considering a repeal to 1031 exchanges. Like-kind exchanges benefit millions of American investors and businesses every year. 1031 exchanges encourage businesses to expand and help keep dollars moving in the U.S. economy. Tell Congress 1031 exchanges have powerful value to the U.S. Economy. Bring your voice to the discussion in Washington, D.C.! Take Action Now…
Study Reveals U.S. Cities Most And Least Recovered Since The Recession
A recent report uses several key data points to determine which cities have best recovered since the recession, considering the percentage change in the civilian unemployment rate, the change in median household income, and the change in median home value, in 510 American cities from the end of the recession in 2009 to the most recent available data in 2012. Data was provided by the U.S. Census Bureau. Read More…
Attend a Complimentary 1031 Exchange Webinar
Title: 1031 Exchanges & Tax Planning in an Environment of Increasing Taxation
Presenter: Scott Saunders, Asset Preservation, Inc.
This 90-minute course provides a concise and thorough overview of IRC Section 1031 tax deferred exchanges for accountants, CPAs and tax advisors. In addition to covering critical IRS time deadlines, like-kind requirements, and other exchange-related issues; the class will provide a summary of current developments including applicable Revenue Rulings, PLRs, and other IRS guidance on current issues related to exchanges.
Date: Monday, July 14, 2014
9:00 a.m. – 10:30 a.m. (PST)
Credits: 1.5 hour (Accountants & CPAs)
Click here to View Details and Registration Info at cpaacademy.org