Accruit Blog

FEA calls Federal regulation of Exchange Facilitators in financial reform bill a good start

Industry's only trade association supports strong regulation, looks forward to working with Consumer Financial Protection Bureau to craft consumer protection measures

President Obama is slated to sign the Consumer Financial Protection Act of 2010 (CFPA) into law in the coming days, and the Federation of Exchange Accommodators (FEA) believes the move is an important first step toward assuring comprehensive protection for all consumers. The FEA, the trade association representing the exchange facilitator industry, says it looks forward to working with the Consumer Financial Protection Bureau to develop regulations governing exchange facilitators, also known as Qualified Intermediaries, who facilitate tax-deferred exchange transactions under Internal Revenue Code §1031. Regulations are needed especially with respect to the security of client funds.

1031 Exchange Tips: a look at simultaneous exchanges (or swaps)

Education has always been a key component of the like-kind exchange (LKE) industry and frankly, it has always been one of the more enjoyable parts of my job. Despite the fact that the 1031 exchange business focuses on a very narrow part of the tax code, there will always be significant challenges associated with anything that involves the IRS. So for this month's 1031 Tips, I'm stepping back and reexamining the most basic type of 1031 exchange, the simultaneous LKE, also known as the "swap."

The oldest form of exchange, the simultaneous LKE can take on three basic forms:

  • Two-party swap format, without the use of a Qualified Intermediary (QI)
  • Three-party format, without the use of a QI
  • Two or three-party format, with a QI

For the purposes of this article, I'll stick to the two-party swap format.

O&G: Independent Producer Value Capture Workshop a big success in San Antonio

These are challenging times for most independent oil and gas producers. Traditional competitive concerns are complicated by legislative and regulatory uncertainty, while difficult economic conditions have tightened access to operating capital for some companies.

Strong, smart, strategically minded producers have weathered the storm, but even the best independent O&G businesses remain focused on the cash flow and tax liability issues that directly weigh on their future success.

The good news: amidst the chaos and uncertainty, there are proven value-generation solutions that the independent producer can put into play today.

IRS issues 45 and 180-day extensions for disaster areas in Mississippi, Tennessee and Alabama

This just arrived via e-mail from the FEA:

The IRS has issued extension Notices for the following disaster areas (the Covered Disaster Areas) for storms beginning on the disaster date in bold:

Mississippi (April 23): Attala, Choctaw, Holmes, Monroe, Oktibbeha, Union, Warren and Yazoo West Virginia: Fayette, Greenbrier, Kanawha, Mercer and Raleigh

Alabama (April 24): DeKalb, Marshall and Walker

Tennessee (April 30): Benton, Carroll, Cheatham, Chester, Clay, Crockett, Davidson, Decatur, DeKalb, Dickson, Dyer, Fayette, Gibson, Hardeman, Hardin, Haywood, Henderson, Hickman, Houston, Humphreys, Jackson, Lauderdale, Lawrence, Lewis, Macon, Madison, Maury, Montgomery, Obion, Robertson, Rutherford, Smith, Stewart, Sumner, Trousdale, Wayne, Williamson and Wilson

Like-kind exchange insight: when can exchangers get their proceeds back?

Exchangers frequently inquire about when they may receive all, or part of their exchange proceeds back. It is a question I have been asked countless times, and in certain circumstances giving the right answer can be difficult. We're talking, after all, about the proceeds from the exchanger's sale, and sometimes the need for their return is pressing. Regardless of the need, though, there are very rigid regulations regarding when qualified intermediaries (QIs) can release a client's exchange proceeds. Those same regulations make no provision for how badly those funds may be needed for purposes outside a properly structured like-kind exchange (LKE).

Accruit: (belatedly) celebrating a decade of shared success

At Accruit, we don't normally make a big deal of milestones. We note their passing, take stock of what has been accomplished, set new goals and move on. But Accruit recently marked its tenth anniversary, and I'd like to take a second to review how far we've come together since March 16, 2000.

In the beginning there were three or four of us in a small office with little more than a good idea. Today, a decade later, we can proudly point to the following accomplishments:
  • We've served hundreds of clients in more than 20 industries.
  • We're the largest provider of repetitive, high-volume 1031 exchange programs in the US.
  • Accruit's advanced Exchange Manager™ technology is the foundation for the only patented like-kind exchange process in the industry.
  • We conduct 250,000 exchange transactions annually.
  • Accruit currently has roughly $8 billion in assets under management.
  • We manage more than 3 million layers of asset records.

Virginia passes Exchange Facilitator Act

The Virginia state legislature has approved a new law governing the activities of qualified intermediaries and the state's governor, Bob McDonnell, has signed the act into law. The Virginia Exchange Facilitator Act (Virginia House Bill 417) is patterned largely after the Federation of Exchange Accommodators Model Act and will become effective on July 1.

You can review the text of the Virginia Exchange Facilitator Act here. You can also find important information on other state and federal regulations that may affect your business by visiting our Exchange Library page.

California not only made the right decision, it made the green decision

As we reported last week, California has decided to eliminate all the provisions within AB 2640 targeting Like-Kind Exchanges (LKEs) in the state. This is good news, as these provisions were particularly unfriendly to businesses that currently, or will someday, employ qualifying exchangeable assets. In short, the measures would have eliminated the enormous benefits of LKEs in California. From an economic standpoint it makes sense to keep LKEs working for the state as their use allows a very large number of businesses to participate in a virtuous cycle of business transactions. LKEs immediately and efficiently reinvest dollars back into company operations, impacting not just their employees, but the overall health of the marketplace, too.

Update: California 1031 provisions dropped - official

We noted yesterday that the California legislature was set to drop anti-1031 exchange provisions in AB 2640, a bill aimed at raising new revenues in the state. This move is now official, according to the Federation of Exchange Accommodators (FEA). Here's the text of an alert they issued earlier today:

California Assembly Bill Provision 2640 Regarding Like-Kind Exchanges To Be Removed


We learned last night that California Assemblyman Juan Arambula has pledged to drop all provisions contained in AB 2640 relating to limitations on like-kind exchanges in California.

FEA alert: 45 and 180-day extensions for disaster areas in New Jersey and West Virginia

The FEA has issued an important alert for businesses operating in areas of New Jersey and West Virginia affected by recent heavy storms.

The IRS has issued extension Notices for the following disaster areas (the Covered Disaster Areas) for storms beginning on March 12th (disaster dates are in bold) :

New Jersey: Atlantic, Bergen, Cape May, Essex, Gloucester, Mercer, Middlesex, Monmouth, Morris, Passaic, Somerset, and Union

West Virginia: Fayette, Greenbrier, Kanawha, Mercer and Raleigh

[Note that the IRS may add additional areas later as FEMA adds them. If you are near the Covered Disaster Area, you should check the disaster announcement website for updates. The FEA will not issue announcements if more areas are added.]

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