On January 24, 2023, the IRS issued Notice CA-2023-02 that may extend your 1031 deadlines pursuant to IRS Revenue Procedure 2018-58 (Rev. Proc.) in connection with the storms, flooding, landslides, and mudslides in California beginning December 27, 2022.  This IRS notice is separate, and in addition to, the IRS notice issued on January 10, 2023 (CA-2023-01) in connection with the storms, flooding, and mudslides beginning January 8, 2023.

IRS Notice CA-2023-01

Section 6 of the Rev. Proc. allows certain taxpayers to extend certain 1031 deadlines to May 15, 2023.  

Section 17 of the Rev. Proc. allows certain taxpayers to extend certain 1031 deadlines to May 15, 2023 or 120 days – whichever is later (however, this extension cannot go beyond one year or the due date for the taxpayer’s tax return for the year of the sale, as extended).

As of January 24, 2023, the disaster areas are:  Calaveras, Merced, Monterey, Sacramento, San Joaquin, San Luis Obispo, Santa Barbara, and Santa Cruz counties.

Taxpayers meeting the definition of “Affected Taxpayer” are eligible for both the Section 6 and Section 17 extensions, regardless of the relinquished property and/or replacement property location and must choose which extension option to proceed under. The definition of “Affected Taxpayer” includes individuals who live, and businesses whose principal place of business is located, in the covered disaster area. The Section 17 extension is also available to taxpayers who are having difficulty meeting their 1031 deadlines due to the disaster (See Rev. Proc. Section 17.02(b)(ii) for examples of such “difficulty”).

For a more detailed explanation of the Disaster Relief extensions, click here: apiexchange.com/disaster-relief/

Taxpayers should consult their tax advisor to determine their eligibility for an extension and alert their Exchange Counselor as soon as possible of any extended 1031 deadlines.