New Hampshire enacts 1031 exchange reform bill

The Federation of Exchange Accommodators (FEA) has received confirmation that the New Hampshire Governor John Lynch has signed SB 483 into law. According to the FEA:

The new law amends prior law, which deprived taxpayers of Section 1031 tax deferral on a state level if they purchased replacement property in the name of a new entity, notwithstanding that the acquiring entity was a disregarded entity. The typical situation would be that in which a taxpayer was required by a lender or TIC sponsor to acquire a replacement property in the name of a new single member LLC. The State of New Hampshire began disallowing exchange treatment on those transactions in 2008 and began to audit previously closed transactions as far back as 2004, without notice either to taxpayers or to the professionals in the industry.

The new law makes it clear that exchange treatment will not be affected by taking title in the new entity as long as the entity is a single member LLC, revocable trust or other entity which is disregarded for federal income tax purposes. The amendment eliminates the “claw back” efforts to 2004.

Accruit President and CEO Brent Abrahm, who co-chairs the organization's state legislative committee, says the new legislation is very good news for businesses in the state of New Hampshire and applauds the state's lawmakers for working to put its companies on a level footing with those in neighboring states.

Abrahm encourages potentially affected businesses to consult with their tax advisors on how SB 483 might affect their tax strategies. Additionally, Accruit representatives are happy to assist in these discussions in any way that the tax advisor deems appropriate.