EP 20 - Unraveling the Mystery of 1033 Exchanges due to Involuntary Conversions

What now? How does this affect you from a tax perspective? What are your options?

Involuntary conversions of real estate such as eminent domain or even natural disasters do not have to end badly.

We’re going to unravel this mystery today on Go Ahead, ASK!

1033 Exchanges due to Involuntary conversions from an eminent domain action (condemnation) by a government agency or from a natural disaster such as a fire, flood, hurricane, tornado, mudslide or other act of God are complex and confusing. There is little guidance from the IRS on 1033 Tax Deferred Exchanges. We demystify what qualifies and what doesn’t when an involuntary conversion occurs, and you are faced with structuring a 1033 Exchange. Discussion includes compliance issues such as what kind of real or personal property qualifies for 1033 Exchange treatment, what types of replacement property would be classified as Qualified Use and Like-Kind, what deadlines are involved, what and how much do you have to reinvest to satisfy the reinvestment requirements, how cash or equity that is not reinvested is treated for tax purposes and how a 1033 Exchange is reported.

Email your 1033 Exchange questions to ASK@exeterco.com and we’ll address them in our next episode.

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Host:
William L. Exeter
President and Chief Executive Officer
Exeter 1031 Exchange Services, LLC and Exeter Trust Company
(619) 239-3091
wexeter@exeterco.com

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