Accounting for 1031 Exchange: Taking Care
of Client's Risk
Associated Tax's Dennis Cozen on 1031
Exchanges - Tax implications for doctors, dentists, and other professionals.
Dennis has dedicated his practice to catering to
the special federal income tax needs of doctors and dentists. Taking
care of his clients' risk in accounting for 1031 Exchange transactions is one
example.
The 1031 Exchange is a way for owners of business and investment Real
Estate, if done properly, to sell their property and buy other like property
without paying the Capital Gains Taxes. These transactions are generally known as
deferred exchanges, or 1031 exchanges, and allow the investor to maintain his
investment in another property without losing investment equity to taxes.
If done properly, investment equity is protected from taxes, penalties,
fines, and legal entanglement.
Accounting for 1031 Exchange - Know the Rules
Since 1990, Section 1.1031 of the Internal Revenue Code has covered in
detail the procedure for turning a sale and purchase transaction into an
exchange.
Section 1.1031 rules allow the owner of business and investment Real
Estate to buy and sell their property on the open market, and by following the
rules of the statute, defer the payment of the Capital Gains taxes.
The rules require that the property must be of "like kind." The good
news is, the "like kind" provision for Real property is quite broad. It includes
a wide array of Land, Rental, and Business property. Any of which can be
exchanged for the other.
The rules require that the "Exchanger" use a safe harbor to hold the
proceeds while the exchange was in progress, and spells out what acceptable safe
harbors are.
The rules also detail the specific procedures that the IRS wishes to
see to assure that the letter of the law has been complied with in the
accounting for 1031 exchanges. Failure to comply with accounting for 1031
exchanges may result in major tax, penalty, fine and legal implications.
Associated Tax and Dennis Cozen, through Dennis's certification to
practice before the IRS combined with Dennis's extensive 1031 exchanges
experience, can provide you with the safety and security you seek in this
outstanding tool for mitigating federal tax obligation.
Contact
Associated Tax for more help with accounting for 1031 exchange transactions.
Request an appointment to sit down with Dennis Cozen for a no risk, no
obligation, no pressure discussion.
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