title>Tax Guru-Ker$tetter Letter Wizard Animation

                 

Tax Guru-Ker$tetter Letter
Friday, February 25, 2005
 
Handling Cash In 1031s

Q:

Quick question.

Can an investment property be sold for cash and then the proceeds be used to purchase another investment property to qualify under 1031?

If the answer is yes - why would a facilitator be needed?
Or does the property actually have to be traded to defer the gain.

I am somewhat confused about the rules.

 

A:

Under Section 1031, you are not allowed to touch any of the proceeds from the disposal leg, even for a second.  If  you do have actual or constructive receipt of any cash, it is taxable to you, regardless of what you do with the money.

The facilitator parks the cash for you so that you won't be considered to have had access to it.

We don't make the rules.  Congress and IRS do that part.  We just help you understand and comply with them.

Kerry Kerstetter

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- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 2/25/2005 03:38:00 PM Send this post:

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