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Tax Opportunity Window Closing for Investors on 12/31/12

It’s almost impossible to watch the news on television or read any financial publication and not hear about the looming “fiscal cliff” facing America. Current tax law, unless modified by Congress and the President, calls for automatic tax increases coupled with spending cuts beginning in 2013.

In addition to higher taxes on those who make more than $250,000 a year, capital gains taxes are slated to increase significantly on January 1, 2013. These looming tax increases have created many concerns for real estate investors.

Fortunately, for investors selling investment real estate, there is a small window of opportunity in December to take advantage of the tax deferral benefits of a 1031 exchange. This provides investors the option to receive proceeds in 2013 – and still take advantage of either the lower 2012 capital gains tax rate, or the tax rate in place for 2013. The article, When to Pay the Piper, discusses this tax strategy which provides real estate investors the benefits of either tax scenario. For the full article, Read More…

Information for Exchangers Selling From Oct. 18 – Dec. 31, 2012

An exchanger must complete the acquisition of a replacement property in a 1031 exchange before 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.

IRS Issues Proposed Regs on 3.8% Medicare Tax on Net Investment Income

The IRS has issued Proposed Regulations, REG-130507-11, regarding the new 3.8% Medicare tax on net investment income imposed by IRS Section 1411. The proposed regulations affect individuals, estates and trusts. For more information, Read More…

1031 Exchange Webinar for Accountants (1hr CPE Credit)

Title: The Power of Strategy: Mastering 1031 Tax Deferred Exchanges
Presenter: Scott Saunders, Asset Preservation, Inc.

Course Description
This one hour course provides a concise and thorough overview of IRC Section 1031 tax deferred exchanges for accountants, CPA’s 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, PLR’s and other IRS guidance on current issues related to exchanges.

Course Details:
Date: Monday, January 14, 2013
9:00 a.m. – 10 a.m. (PST)
Cost: Free
CPE Credits: 1.0 hour (Accountants & CPAs)

Click here to View Details and Registration Info at cpaacademy.org

IRS Delays New Tangible Property Regulations

The IRS recently released Notice 2012-73, which delays the effective date of its new tangible property regulations by two years. The IRS recognized there was significant complexity and effort required to implement the tangible property regulations and is providing taxpayers more time to fully understand the impact of the new tangible property regulations. For the full notice, Read More…

IRS Provides Tax Relief to Victims of Hurricane Sandy


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.

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