1031 news

The Bartell Decision: Non-Safe Harbor Parking Exchanges Have Just Become Safer

Background on Reverse Tax Deferred Exchanges

Modern day tax deferred exchanges began in the early 1980s with a court ruling (the Starker case) that an exchange for relinquished property and the purchase of corresponding replacement property did not need to take place simultaneously to be valid. The Tax Reform Act of 1984 contained a legislative response to the holding in the Starker case. While the Starker case involved a five-year period between sale and purchase, Congress reduced this to a maximum of 180 days from sale to purchase.

Ritchie Bros. Auctioneers Acquires IronPlanet

Ritchie Bros. and IronPlanet have announced an agreement under which Ritchie Bros. is acquiring IronPlanet for approximately $758.5 million U.S.

According to Construction Equipment Guide, IronPlanet "complements Ritchie Bros.' primarily end-user customer base, as it focuses largely on the needs of corporate accounts, equipment manufacturers, dealers and government entities in equipment disposition solutions."

Webinar Q&A: What’s New with 1031 Like-Kind Exchange Tax Planning?

PwC and Accruit recently conducted a national webinar entitled “What’s New with 1031 Like-Kind Exchange Tax Planning?” It was a well-attended event comprised of tax and finance executives from hundreds of major companies.

1031 Like-Kind Exchange Pitfalls to Avoid - Part II

In 1031 Like-Kind Exchange Pitfalls to Avoid, we examined 1031 exchange practices that could inadvertently cause an exchange to go awry. Most of those examples pertained to the taxpayer coming into constructive receipt of funds. Here, we’ll look at a variety of other practices where problems sometimes occur.

Ancillary Benefits of 1031 Like-Kind Exchange Programs

A 1031 like-kind exchange (LKE) program allows a business to postpone the tax hit on sales of used equipment in anticipation of buying replacement equipment, and each year more business owners seize upon the cash-flow benefits available via a 1031 like-kind exchange strategy, recognizing that reinvesting money into their business beats sending it to the government in the form of unnecessary taxes.

Selling Equipment at Auction? Don’t Ruin Your Like-Kind Exchange!

A successful 1031 like-kind exchange requires careful planning. Planning should include:
  • Reviewing the transaction’s form and timing
  • Understanding the like-kind exchange regulations
  • An examination of the equipment owner’s larger tax picture
  • An assessment of the equipment owner’s cash flow requirements

1031 Like-Kind Exchange Pitfalls to Avoid

Compliance with the IRC Section 1031 Regulations is a lot of form over substance -- if you want to attain a tax benefit, every i has to be dotted and every t crossed. Good faith efforts are not enough, because lurking in the regulations are numerous procedures that have to be followed to achieve a successful deferred exchange. Among other things, these rules require avoiding constructive receipt of the exchange funds received in the sale.

1031 Like-Kind Exchanges for Leasing Companies

The leasing industry is no different than any other type of business in which cash flow and residual value of equipment drive profitability and ROI. Whether you are managing an operating lease or a tax lease of heavy equipment, trucks, cars, office equipment, etc., you could face a tax rate of 40% on the gains from the sales proceeds of the equipment coming off of lease. Leasing companies that can infuse a like-kind exchange (LKE) cash benefit into the equation can provide heightened value to their portfolios.

What is a 1031 exchange? Infographic

They say a picture is worth a thousand words. In this infographic, we've broken the 1031 exchange process into a series of simple steps:

Actual or Constructive Receipt of Funds in a 1031 Exchange

The IRC Section 1031 regulations have at their core a rule against the taxpayer being in actual or constructive receipt of exchange proceeds. This rule covers the period of time from the point of sale of relinquished property to the purchase of replacement property. Of course, once the 180-day exchange period lapses the ability to do a delayed exchange is over and the funds can be returned to the taxpayer. The reason for this requirement is based upon the underpinnings of the delayed exchange regulations themselves.
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