Like Kind Exchange Straddles Two Years

[Twin Turbo Z]

Have a new client who sold farm land in late Nov. of 2016, put those funds into an "exchange". He then located new farm land in Dec. of 2016 (contract signed), but didn't close until the end of January of 2017. I've never done a "like kind exchange", but from what I learned, he should have filed the exchange on 2016's taxes. Its claimed the year the original property sold. So I now have to amend his 2016 tax return. But here is the rub. He was under the impression he claimed the "exchange" the year it closed. So he paid 2017 estimated payments to cover his "exchange monies" not covered. The exchange property bought was 100k less than the property sold. So he paid estimated on 100k. So here is the question. In amending 2016, should I list the 2017 estimated paid on the amended as credits ? Or just amend 2016, have him cut a check to the IRS, and then file 2017 and get him a huge refund back. I figure the latter of the two. But if his taxpayer account shows the monies to cover the amended, then that would save him from cutting a check for a lot of money. Whats your take ?

[Burke]

. The exchange property bought was 100k less than the property sold. So he paid estimated on 100k.
So here is the question. In amending 2016, should I list the 2017 estimated paid on the amended as credits ? Or just amend 2016, have him cut a check to the IRS, and then file 2017 and get him a huge refund back. I figure the latter of the two. But if his taxpayer account shows the monies to cover the amended, then that would save him from cutting a check for a lot of money. Whats your take ?

You cannot list the estimated tax paid for 2017 on the 2016 return. The IRS has it posted to 2017 and will not change that. So, the only choice is to pay the 2016 balance due, and then get a refund for 2017. They will probably charge penalties and interest for underpayment on 2016. When that happens, you can ask for amelioration by letter detailing the circumstances and your client's error. Check to see if a Form 2210 exception is appropriate for 2016, which will mean only penalties and interest since 4/15/17 for late payment.

[Twin Turbo Z]

You cannot list the estimated tax paid for 2017 on the 2016 return. The IRS has it posted to 2017 and will not change that. So, the only choice is to pay the 2016 balance due, and then get a refund for 2017. They will probably charge penalties and interest for underpayment on 2016. When that happens, you can ask for amelioration by letter detailing the circumstances and your client's error. Check to see if a Form 2210 exception is appropriate for 2016, which will mean only penalties and interest since 4/15/17 for late payment.

Then I better file 2017 with all that credit and get it back before we amend last years. Will do on the explanation to bypass penalty also.