Is power company easement eligible for 1033

[mhcpa1964]

Hi all,

TP is a S corp. Power company paid S corp $200k for complete use of a section of their business property. Very large power towers will eventually be erected.

TP bought what they hope is replacement property. They plan to use that property for personal purposes, not for their existing S corp operations.

Does this replacement property qualify for 1033 exchange? I'm confused on whether personal use real estate can be the replacement for commercial use real estate. The replacement property cost more than the easement proceeds, if that helps.

I appreciate any advice and comments.

[mhcpa1964]

The evidence indicates the replacement property also needs to be trade or business property. I was hoping that since the S corp shareholders ultimately have the tax liability they could be the owners of the replacement property.

Still taking advice and comments if one of you have time to suggest.

Enjoy your day.

[TaxGuyBill]

I haven't looked at the verbiage in 1033, but I would assume it would be taxable. MAYBE it could avoid that if the new property is owned by the corporation and the shareholder pays FMV rent on it to the corporation. But personally, I don't think I would go down that route.

[Lion]

Hi all,

TP is a S corp. Power company paid S corp $200k for complete use of a section of their business property.

If the S corp received the monies, it's too late to do an exchange. If they did not, then the S corp can exchange for another business property. Like-kind.

[mhcpa1964]

Much appreciated folks. Enjoy the rest of your weekend.