More LKE stuff - 45 day rule

[Snaggletooth]

Reading in the TTB - the replacement property must be identified within 45 days of the sale.

1) Does this imply the LKE election can be valid even if the sale and subsequent acquisition are two separate transactions? (If so, this is not a true "exchange" in the dictionary sense of the word)
2) Are we no longer talking about a Like-Kind Exchange but instead a deferred exchange? From what I read about a deferred exchange, the sell and buy are not linked in a single transaction, and the treatment of gain is the same as a LKE.

Am I on the right track? Your comments welcome.

[taxea]

Is it being run through an escrow company?

[Snaggletooth]

Not yet Wahiawa

I have brought up the possibility of an intermediary (which can't be the agent or a related party) but without understanding more about the original post, I don't read where it is necessary in all cases.

[Roland Slugg]

Even though the sale of the relinquished property and the acquisition of the replacement property close at different times, a non-simultaneous exchange is considered a single transaction and is reported as such on the T/P's tax returns. F-8824 is the form that reports everything about the LKE, but the sale must also be reported on the usual forms where property sales are always reported ... usually starting on F-4797.

In a non-simultaneous exchange the use of a QI is imperative. The seller must never touch the sale proceeds of the relinquished property until the replacement property closes escrow, and that can be as much as 180 later.

The 45-day rule to ID the replacement property (or multiple possible replacement properties) is absolute. The IRS has made it clear that it will allow no extension of that time limit ... even by one day.

Your selling client would be well-advised to contact a QI as soon as an agreement to sell the relinquished property is signed.

[taxea]

I have brought up the possibility of an intermediary (which can't be the agent or a related party) but without understanding more about the original post, I don't read where it is necessary in all cases.

I understand it to be required for LKE of real estate and possibly all LKE. It is usually someone from the Escrow company

[Snaggletooth]

Thanks to all

Thanks to everyone. Roland you did a great job explaining the nuts and bolts.

Taxea suggests the intermediary is often an escrow company. I believe there are companies that specialize in this for a fee.

[taxea]

Thanks to everyone. Roland you did a great job explaining the nuts and bolts.

Taxea suggests the intermediary is often an escrow company. I believe there are companies that specialize in this for a fee.

you are correct

[Burke]

Reading in the TTB - the replacement property must be identified within 45 days of the sale.

1) Does this imply the LKE election can be valid even if the sale and subsequent acquisition are two separate transactions? (If so, this is not a true "exchange" in the dictionary sense of the word)
2) Are we no longer talking about a Like-Kind Exchange but instead a deferred exchange? From what I read about a deferred exchange, the sell and buy are not linked in a single transaction, and the treatment of gain is the same as a LKE. Am I on the right track? Your comments welcome.

Don't get confused by the two terms. LKE refers to exchange of like kinds of property, i.e, they must be the same type under the IRC. Tax-deferred exchange refers to the deferment of the income tax, not the sale. They are not different events, just different components of a 1031 Exchange. A valid exchange must have both elements. PS: Note the 45-day identification period can occur before or after the sale. So it is really is a 90-day window.