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Exchanging Real Estate For Stock
Q:
Subject: Exchange Question
An individual sells a rental producing property (Schedule E) and has identified a rental income property but it is taxable as an S Corp of which he is currently a 22.5% shareholder. The majority shareholder of 55% will sell his interest within the 180 day limit.Will this qualify as a 1031 exchange?Thank you
A:
From the way you described the situation, there would not be a valid 1031 exchange. It sounds as if you will be disposing of a rental property that you own in your own name. The replacement that you are proposing sounds like a purchase of stock in the S corp that owns a rental property.
A valid 1031 exchange requires like kind properties, which is real estate for real estate. Corporate stock is considered to be personal property, regardless of what assets it owns.
If I misunderstood the details here, please give me a better explanation of the actual ownership of the properties involved.
Kerry Kerstetter
My interpretation of this transaction must have been right, because I received the following reply.
Thanks for getting back to me.
Labels: 1031
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 5/08/2005 09:49:00 PM Send this post:
