Much ado about nothing: the obligations of the intermediary in a deferred exchange

Article Abstract:

IRS official Jody Brewster, in an attempt to place proper weight on the regulations instead of informal government comments, issued a statement intended to clarify an IRS attorney's contention that obligations to sell property must be transferred to intermediaries in deferred exchanges. Since such transfers do not generally take place, the tax community was worried about exchanges failing the intermediary safe harbor, leading to problems in areas such as budget reconciliation and tax underwriting. Brewster's interpretation of the regs found no implication that intermediaries must assume taxpayers' obligations.

Tax-free exchanges

---

Can you use a related party as an intermediary?

Article Abstract:

A Tax Court memorandum opinion in Fredericks v. United States affirmed that exchanges of real property can be structured to avoid recognition of income even though the regulations and safe harbors were not satisfied. The taxpayer used financing from a related party to exchange an interest in an apartment complex for commercial property. The Tax Court accepted the arrangement, over IRS objections that the transaction was really a sale, even though the intermediary was a related party, improvements were made by the intermediary and commissions were paid to the intermediary.

Like-kind exchanges, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation)

---

Some concerns of an intermediary in structuring a deferred exchange

Article Abstract:

An intermediary in a deferred exchange of real estate needs to consider many regulations to protect the tax-free status of the transaction. For example, rules under IRC section 1031 apply to the gain. Reporting and withholding rules apply from the 1980 Foreign Investment in Real Property Tax Act. Other rules cover reporting of interest and the closing agent. There are liabilities included under CERCLA while the transaction is subject to state, sales, use and document transfer tax liabilities. Other intermediary concerns include resignation and agent functions.

Financial intermediation

Similar abstracts:

• Abstracts: Out and about in the towns. Playing up their assets. Development rules
• Abstracts: Valuable lessons in the art of calculation. Times of change. Time to move forward
• Abstracts: Overriding the highway. Out of the ordinary. No more pettifoggery
• Abstracts: Recent developments regarding partnership classification and income allocation. Proposed regulations deal with when a distribution of marketable securities will be treated as a cash distribution
• Abstracts: Research on office markets. Intrametropolitan location and office market dynamics. Did office market size matter in the 1980s? A time-series cross-sectional analysis of metropolitan area office markets

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.