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The exchangor’s right to receive money or other property must be limited. These limitations provide that the exchangor may not, pursuant to the documentation, have a right to receive money or non-like-kind property until the earlier of— the end of the identification period (if the exchangor has not identified any replacement property within 45 days); the receipt by the exchangor of all of the identified replacement property (or that for which identification has subsequently failed due to an unfulfilled material and substantial written contingency, such as zoning approval); or the expiration of the 180-day reinvestment period for a calendar-year exchangor.

This could result in a one-year tax deferral of recognizing the boot received for any exchange by an individual after July 4 because the receipt of the non-like-kind property occurs in the following taxable year. This deferral also applies to a failed exchange begun after this midyear date if the property was properly identified but never acquired for bona fide reasons during the 180 days that followed.

Regardless of whether the exchangor subsequently receives money or boot from the QI at the end of an exchange, IRS Form 1099-S box 2 should be 0, and box 4 should be checked.

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