THE SALE OF A TRUST-TITLED PROPERTY OFTEN MERITS A 1031 EXCHANGE, BUT IT IS IMPORTANT TO INVESTIGATE HOW THE HISTORY OF THE TRUST MAY IMPACT THE PROPERTY’S COST BASIS.
APPLICATION OF SECURITIES LAWS TO TRUSTS If a taxpayer is interested in a 1031-qualified property that is offered as a private placement under U.S. securities rules, the person or entity that owns the property must be “accredited.” Whether a person or entity is “accredited” under federal law depends on the ownership structure:
SECURITIES RULES: ACCREDITATION
Type of Investment
Federal/State Investor Qualifications
Exchange-listed securities
Adult
Public, non-traded securities
State-imposed income, concentration limits
"Accredited" investor
Private placement securities (Reg. D)
"Accredited" Individual • $1 million net worth excluding home OR • $200k/$300k income (single/married)
"Accredited" Irrevocable Trust
"Accredited" LLC/LP/Corp
• $5 million assets OR • All individual investors are accredited (see previous column)
• $5 million assets
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