Section 1031 exchanges and death

Article Abstract:

The IRS ruled in Letter Ruling 9829025 that the death of one of the parties did not result in recognition of gain in a like-kind real property exchange which was interrupted by the death. One of the grantors of a grantor trust died before each of the separate IRC section 1031 exchanges were completed. The ruling does not properly address the section 1031 issue or the replacement properties' bases issue, but it's treatment of the income in respect of a decedent issue is apparently sound.

Tax Management, Tax accounting, Grantor trusts

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Dirt isn't just dirt: exchanges of property held for sale - Neal T. Barker Enterprises

Article Abstract:

The Tax Court in Neal T. Barker Enterprises v. Commissioner ruled that IRC section 1031 tax-free exchange treatment was not available where the taxpayer made 14 single sales of subdivided property prior to exchanging in bulk the remaining 38 lots. The court found that the property was not held for investment, but was trade or business property subject to section 1221 capital gains tax. The court's detailed treatment of the issue is valuable for planning purposes.

Investments, Real estate, Real property, Land subdivision

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Check-the-box proposed regulations: an instant hit

Article Abstract:

The US Treasury's proposed check-the-box tax election regulations for classifying business entities will simplify and revolutionize this area of tax law. Unincorporated businesses will be able to elect tax treatment as either partnerships or coporations under this change. The regulations cover domestic, foreign, and single-member entities, as well as ineligible entities, elective change of classification, and the default rule for non-electing companies.

Corporate income taxes, Partnership, Partnerships, Tax elections

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