Taxable Boot Related to Prepaid Rent and Security Deposits
In a standard closing (not involving a 1031 exchange), it is typical for the prepaid rent and security deposits being held by the seller to be treated as a credit to the buyer at closing. In that context, the net amount paid to the seller for the property at closing is simply reduced. However, this same practice in connection with a sale of relinquished property in a 1031 exchange will inadvertently result in boot, and the amount of prepaid rent and security deposits retained the by taxpayer will be taxable.
Thinking about changing your corporate structure from a C corporation to a subchapter S corporation? S corporations, partnerships, and certain LLCs are considered pass-through entities, which means they "pass through" various types of taxable income: interest, dividends, deductions, and credits to the shareholders, partners, or members responsible for paying tax. This avoids the double taxation associated with C corporations that pay entity-level taxes and then distribute dividends that become subject to individual taxes.
During his campaign, President-elect Trump was criticized for the non-release of income tax returns. The information available is limited to his own statements and the release of three pages from his 1995 returns of income from New York and New Jersey. These pages reveal what amounts to a $900M loss. Unfortunately, these documents are driving misstatements and generating misleading information related to Section 1031 Like-Kind Exchanges – one of the real estate industry’s most popular tax strategies
IRVINE, Calif., Nov. 14, 2016 — HomeUnion, an online real estate firm providing all of the services investors need to buy, sell and manage real estate, has formed a partnership with Accruit, a leading qualified intermediary for taxpayers executing like-kind exchanges. The partnership enables HomeUnion’s investor clients to access Accruit’s services, as well as their Certified Exchange Specialists (CES®), when closing like-kind exchanges in real estate. A like-kind exchange in real estate – also known as a 1031 exchange – allows investors to sell a property and reinvest the proceeds from that sale into a new property to defer capital gains taxes
Accruit, LLC, the nation’s leading provider of qualified intermediary (QI) services and 1031 like-kind exchange (LKE) program solutions, is pleased to announce the addition of Ted Jolly as Director of Marketing and Inside Sales.
What is the Same Taxpayer Rule in a 1031 Like-Kind Exchange?
In a 1031 exchange, the taxpayer who owns the relinquished property must be the same taxpayer who takes ownership of the replacement property. Keep in mind that one of the justifications for tax deferral is that a taxpayer has reported all the incidences of ownership and that the taxpayer’s basis will carry over into the new replacement property. The taxpayer is only getting deferral, not permanent tax avoidance, and the sheltered gain will be due ultimately upon a future sale of the property without an exchange. If the taxpayer were to change tax identities within an exchange, there would be no continuity of tax ownership and no reason to afford deferral.
The Associated Equipment Distributors (AED) named PricewaterhouseCoopers LLP (PwC US) and Accruit the preferred providers of like-kind exchange (LKE) services for the second consecutive year in 2016. For more than a dozen years, PwC and Accruit have been supporting members of the AED, and they currently provide LKE services to over 75 AED members.
Asher Azim walks viewers through the basics of a 1031 like-kind exchange of business-use assets (in this case, construction equipment) in which a business owner is able to defer taxes when selling equipment and purchasing like-kind equipment.
Professional QIs Are Central to 1031 Exchanges and Help a Wide Variety of Asset Owners
Las Vegas, Nevada (September 15, 2016)
The U.S. Treasury rules giving rise to the like-kind exchange “Qualified Intermediary” turn 25 this year. Established by Treasury safe harbor regulations in 1991, professional Qualified Intermediaries (QIs) promote compliance with the law and make the benefits of like-kind exchanges, also known as 1031 exchanges, accessible to business and property owners nationwide.
Most users of Section 1031 understand the 180-calendar day deadline to complete their like-kind exchange. This general understanding of the exchange period deadline is fine for most transactions, but many exchangers remain unaware of the more nuanced definition of this critical period.