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Reverse §1031 exchange -- Recent tax court case

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    Reverse §1031 exchange -- Recent tax court case

    This post will not be relevant or of any interest for most visitors here, but for those few who have an interest in §1031 exchanges, perhaps it will.

    One of my contacts just brought to my attention a recent (2016) tax court case concerning a reverse §1031 exchange. A reverse exchange is a non-simultaneous exchange in which the replacement property is acquired before the relinquished property is sold, but it's "parked" with a QI until the relinquished property is sold. The case is: Estate of George H. Bartell, Jr. v. Commissioner, 147 T.C. No. 5. The opinion is long ... 63 pages ... but it contains several interesting facets.

    The most interesting part for me was the discussion at the bottom of page 43 and the very top of page 44. It got me to thinking about why people have to jump through all the §1031 hoops, especially the mandated use of a costly QI, when the same requirements are not imposed on certain other types of non-simultaneous exchanges, namely involuntary conversions covered by Code §1033. That, in turn, got me to wonder why taxpayers can't simply sell one business or investment asset and purchase a replacement "like-kind" asset, within mandated time limits, of course, and have all or part of the gain deferred. I mean, really ... what's the difference?

    Maybe I will suggest that to Congress. Let's see ... who is my congressman .... ?
    Roland Slugg
    "I do what I can."
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