1031 TAX FILING REQUIREMENTS
“BEWARE IF YOU ARE CLOSING AFTER OCTOBER 17”
FORM 8824 – REPORTING THE EXCHANGE
Form #8824, Like-Kind Exchanges, is filed to reflect the exchange on the Exchanger’s tax return in the year the transaction began (i.e. the year the relinquished property was sold to a buyer.) Form #8824 requires the Exchanger to provide the following information:
Part I - Information on the Like-Kind Exchange
1) Description of like-kind property given up;
2) Description of like-kind property received;
3) Date like-kind property given up was acquired;
4) Date property was transferred to other party;
5) Date like-kind property was identified;
6) Date like-kind replacement property was received.
Part II - Related Party Exchange Information
Part III - Realized Gain or (Loss), Recognized Gain, Basis
Part IV - Deferral of Gain from Section 1043 Sales
FORM 4797/SCHEDULE D - REPORTING THE GAIN
Form #4797 or Schedule D is filed to report the taxable gain. The gain must be allocated between capital gain, ordinary income depreciation recapture, Section 1231 gain and unrecaptured Section 1250 gain.
FORM 6252 - REPORTING AN INSTALLMENT SALE
Form #6252, Installment Sale Income, must be filed if the Exchanger carries back a note to a buyer on the sale of the relinquished and is able to report the taxable gain under the installment sale rules.
CONSULT WITH YOUR TAX ADVISOR
This is a brief summary. Every Exchanger should consult with a tax advisor to review their specific situation and tax filing requirements.
DUE DATE OF THE TAX RETURN
An Exchanger has to complete their exchange within 180 calendar days, or the date their tax return is due - whichever is earlier.
If an Exchanger closes an exchange:
1) Between October 17 and December 31;
2) Files their tax return on April 15;
3) Desires the ability to have up to 180 calendar days to complete their exchange by purchasing one or more replacement properties; then the Exchanger must:
File an extension by April 15, using Form #4868, which would extend the date the Exchanger’s tax return is due until August 15 of that year.
If the tax extension is not filed by their tax filing date, the Exchanger’s “exchange period” is shortened to the actual date their tax return is due and filed.
TM 1031 Exchange and Asset Preservation, Inc. do not give tax or legal
advice. The information contained herein should not be relied upon as a
substitute for tax or legal advice obtained from a competent tax and/or
(c) Copyright 2005 Stewart Title Guaranty Company
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