Perhaps the most important safe harbor from the 1991 regulations is the use of a “qualified intermediary” to hold the proceeds of an exchange. With this and other rules now firmly in place, taxpayers (and their agents, accountants and attorneys) could proceed with greater confidence in conducting transactions that serve to defer the payment of capital gains taxes by delaying the recognition of gains until a future transaction. • Revenue Procedure 2000-37 (reverse exchanges and improvements) • Revenue Procedure 2002-22 (tenant-in- common interests) • Revenue Ruling 2004-86 (Delaware Statutory Trusts) Since 1991, the IRS has published additional sets of important “safe harbor rules” regarding §1031 exchanges, including:
AT LEAST FOR THE NEAR FUTURE, §1031 EXCHANGES APPEAR TO BE SAFE FROM LEGISLATIVE CHANGE.
• Revenue Procedure 2008-16 (vacation rentals)
These guidelines were issued to provide more clarity and certainty for taxpayers conducting less conventional exchanges.
As of January 1, 2018, it is no longer possible to exchange intangibles such as licenses, patents, nor chattel such as aircraft, vehicles, machinery, and artwork. In other words, §1031 exchanges now are limited to real estate. On May 28, 2021, the Biden Administration released the Fiscal Year 2022 Budget, and the “General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals,” which is commonly referred to as the “Green Book.” Among several other tax increases, the Green Book included a proposal to drastically reduce the benefits of a §1031 exchange.
P A G E 6 8
Powered by FlippingBook