Structuring 1031 Like-Kind Exchanges: New Final IRS Regulations Regarding "Real Property"

Permanent Structures, Offshore Platforms and Pipelines, Intangible Assets; Applying the 199A Business Deduction

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE video webinar with Q&A


Conducted on Tuesday, April 27, 2021

Recorded event now available

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Course Materials

This CLE course will examine the impact of tax reform on like-kind exchanges under IRC Section 1031 with a particular focus on what now qualifies as "real property" under new regulations recently released by the IRS. The panel will discuss the requirements for like-kind exchanges to qualify for tax-deferred treatment and provide best practices for structuring transactions to avoid adverse tax consequences after closing.

Description

Failure to observe the Section 1031 rules will cause a like-kind exchange to become a taxable event. Advisers must correctly structure Section 1031 exchanges or risk unraveling exchanges, amending tax returns, or exposing clients to unexpected tax obligations.

From defining the exchange facilitator's role in complex structures such as forward or reverse exchanges to navigating related-party rules, various techniques and structures help ensure compliance with Section 1031 and tax-free treatment for the transaction.

The Tax Cuts and Jobs Act limited the application of 1031 to exchanges of real property, with the effect that certain assets were no longer eligible for 1031 treatment. In December 2020, the IRS issued final regulations that provide clarity regarding assets such as oil and gas pipelines, inherently permanent structures, and tangible assets connected with real property, as well as interests in or contract rights relating to real property.

Listen as our expert panel reviews and offers their insights into Section 1031 developments and the latest planning techniques. The panel will provide attendees with best practices for documenting a Section 1031 exchange and avoiding unwanted tax consequences.

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Outline

  1. The framework of 1031 exchanges
  2. Reverse exchanges
  3. Forward exchanges
  4. Tenants in common and DSTs
  5. Section 1031(f) related-party rule
  6. Improvements exchanges
  7. Drop-and-swap strategies
  8. Calculating 199A business deduction in conjunction with an exchange
  9. What constitutes "real property" under the new IRS regulations

Benefits

The panel will review these and other high priority issues:

  • What is the role, and what are the restrictions of, the exchange facilitator?
  • How can counsel help clients avoid the 1031(f) restrictions in related-party exchanges?
  • Is there a "holding-period requirement" under Section 1031?
  • What are the requirements for a reverse exchange under Section 1031?
  • What are viable structures for improvement exchanges?
  • What are the current drop-and-swap practices?

Faculty

Borden, Bradley
Professor Bradley T. (Brad) Borden

Professor of Law
Brooklyn Law School

Professor Borden’s research, scholarship, and teaching focus on taxation of real property transactions and...  |  Read More

Flavin, Marie
Marie C. Flavin

Senior Vice President/Northeast Regional Manager
Investment Property Exchange Services

Ms. Flavin is a member of the New York and Connecticut Bars, and has been practicing real estate law since 1992. She...  |  Read More

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