Qualified Intermediaries Celebrate 25 Years of Section 1031 Like-Kind Exchange Compliance and Taxpayer Protections

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.

Like-Kind Exchange Letters Sent to Clinton, Trump Campaigns

The Federation of Exchange Accommodators (FEA) is among 26 groups that signed letters sent to the Hillary Clinton and Donald Trump presidential campaigns last week. The letters explain the benefit of real estate exchanges for small businesses, farmers, ranchers, and for use in land conservation. The timing of these letters are important, as both campaigns are developing and revising tax plans.

On Capitol Hill, Recess Doesn’t Mean Play Time

While congressmen and women are out campaigning, congressional staff continue to work in the area of tax reform. As part of Accruit’s continued advocacy efforts on behalf of our real estate and personal property LKE clients and as co-chair of the Federation of Exchange Accommodators Government Affairs Committee, I’ve made six trips to Capitol Hill this year to meet with congressional staff, specifically targeting members of the House Ways & Means Committee and Senate Finance Committee, both of which determine U.S. tax policy.

House Agriculture Committee Advocates on Behalf of Section 1031

In June, two members of the House Agriculture Committee, Representative Bob Gibbs (R-OH) and Representative David Rouzer (R-NC), and 17 other congressmen and congresswomen wrote a letter to House Ways and Means Committee Chairman Kevin Brady (R-TX) urging the committee to help preserve 1031 like-kind exchanges. The letter, attached below, called Section 1031 "integral to [its] operations and ongoing vitality."

Tax Reform Discussion Draft Released to Simplify Depreciation

In April, Senator Ron Wyden (D-OR) released a cost recovery reform and simplification discussion draft that would repeal our current depreciation method for assets used in business. Currently, deprecation is calculated under MACRS (Modified Accelerated Cost Recovery System). This proposal would repeal MACRS and replace the schedules with six individual pooling methods into which similar tax life assets are grouped together (pooled) and depreciated as a group of assets. Accruit, along with several of our association partners, were given an overview of the plan and asked for feedback prior to the release.

Letter from the 1031 Coalition to the Senate Finance Committee

Accruit was pleased to contribute to the following letter submitted to the Senate Finance Committee yesterday on behalf of the 1031 Like-Kind Exchange Coalition. We are seeing great strides in our efforts with Congress as we continue to educate members on the benefits that 1031 like-kind exchanges bring to the economy.

California Code of Regulations Proposal Unfeasible for Like-Kind Exchanges

A recent California Code of Regulations proposal considers requiring corporate taxpayers to use an historical apportionment formula to trace assets through numerous layers of like-kind exchanges to determine how to apportion gains from the eventual sale of a replacement asset that might be a decade (or more) removed from the original sale of a relinquished asset. The attached letter from the leaders of the American Financial Services Association, the Equipment Leasing and Finance Association, and the Association of Commercial Vehicle Lessors was written to the California Franchise Tax Board to provide insight into the burden that such a requirement would place upon the taxpayers.

1031s Build America

Last week, I attended the Federation of Exchange Accommodators’ (FEA) annual conference, where it really struck home how impactful tax policy is for America.

The FEA is our nation’s only recognized association dedicated to education, proper conduct, and legislative representation for qualified intermediaries servicing IRC Section 1031 of the tax code, and as a sitting board member for over seven years, I am acutely aware of our membership’s activity levels. Activity levels that, in many ways, mirror our broader economy.

New Study Confirms Like-Kind Exchanges Encourage Job Creation and Stimulate Economic Growth

A new, in-depth study of the U.S. commercial real estate market found that 1031 like-kind exchanges strengthen the market and stimulate job creation, investment, and economic growth.

“The Economic Impact of Repealing or Limiting Section 1031 Like-Kind Exchanges in Real Estate” analyzed more than 1.6 million real estate transactions over an 18-year period. It was commissioned by the Real Estate Like-Kind Exchange Coalition, comprised of organizations across all sectors of the industry, in response to legislative proposals to repeal Section 1031.

ELFA Capitol Connections 2015

In an effort increase awareness of current policy issues and to convey the voice of the equipment leasing and financing industry, members of the Equipment Leasing and Finance Association (ELFA) are on Capitol Hill May 13-May 14 for meetings with elected officials and legislative staff.

Accruit's Brent Abrahm joined top executives in the leasing industry to meet with members of Congress and the Joint Committee on Taxation on matters pertinent to like-kind exchanges.

Photo: (left to right) Dan McKew of Capital One Leasing, Representative Lynn Jenkins (R-KS), Accruit's Brent Abrahm

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