1031 Exchanges – Follow the rules!
In a recent summary opinion by the US Tax Court (Ralph Crandall TC Summary Opinion 2011-14) the taxpayers were found to not qualify for nonrecognition treatment under Section 1031. The parties established two escrow accounts for the exchange but neither account limited the taxpayer’s right to receive, pledge, borrow, or otherwise obtain the benefit fo the funds.
As with many prospective tax transactions, it is of paramount importance that the rules and form of transactions be followed to the letter.
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