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Pennsylvania Version of a 1031 Exchange May be Coming Soon  

Commonwealth of PA

Pennsylvania Gov. Tom Corbett recently released his budget for the next fiscal year and it included many broad-based business tax reform initiatives that could improve Pennsylvania's standing as a place to do business and spur economic growth. Also included was a proposal that had everyone at 1031 CORP. pretty excited - a Pennsylvania version of a 1031 exchange! PA has long been one of the few states that does not recognize 1031 exchanges or have a similar provision to allow the deferral of state income tax on the exchange of assets held for business use or investment.

Learn More and How YOU Can Help 

Installment Sale Treatment for Failed 1031 -- Maybe Not This Year! 1040

An exchange started near the end of a tax year will often run into the following tax year. The regulations address how to handle incomplete exchanges and cash "boot" received by the taxpayer in the following year.


If you structured your exchange with a "bona fide intent" to complete the exchange, you may elect to report the exchange as an installment sale in the tax year in which the first relinquished property was sold. Under the installment sale reporting rules, the receipt of an indebtedness that is secured directly or indirectly by cash or a cash equivalent is treated as receipt of payment. The regulations provide that exchange proceeds held by a qualified intermediary, such as 1031 CORP., could fall into that category and as long as there is a bona fide intent to exchange, the taxpayer can report cash not reinvested in replacement property as an installment sale. [Reg. 1.1031(k)-1(j)(2); Temp Reg. 15a.453-1(b)(3)(i)].

Wealth Building Webinar Series 
Join us for our complementary Wealth Building Webinar Series designed to help you build and preserve wealth. 


Thursday, February 28, 2013 12:00 PM - 10:00 PM EST 

Conversion of 1031 Replacement Property to a Primary Residence 


Thursday, Mar 7, 2013 12:00 PM - 12:45 PM EST  


Thursday, Mar 14, 2013 12:00 PM - 12:45 PM EST  

1031 Exchange of Vacation Homes


Thursday, March 21, 2013 12:00 PM - 12:45 PM EDT

1031 Guide for Real Estate Professionals 


Thursday, March 28, 2013 12:00 PM - 12:45 PM EDT

Advanced 1031 Exchange Topics 


View Full Schedule and Register Now! 

CAUTION! You May Need to File an Extension


The exchange period begins upon the sale of the clock - deadlinefirst relinquished property and ends at midnight on the earliest of either the 180th day or the due date of your return, including extensions, for the tax year in which the exchange was initiated. If your 180-Day Exchange Period deadline falls AFTER the due date of your return and your exchange is not or will not be completed before the filing deadline, you MUST file for an extension of time. This extension will provide you with the benefit of the full 180 days to complete your exchange and an additional six months to file your return.


Filing your return before your exchange is complete WILL automatically end your 180-day exchange period.


Individuals must file Form 4868 on or before your normal filing date to obtain the automatic extension of time. For more details regarding return extensions and applicable taxes, please consult your tax advisor. If this form is not properly filed, you will automatically end your exchange period and any replacement property acquired will not qualify for the exchange thus creating a taxable event. Once your return is filed, you cannot amend your return to include the exchange or obtain an extension of time to complete the exchange. You will be required to report the sale as a taxable event.

Trending this Month...
Conservation Easements

We did not have anyone exchanging conservation easements for a few years and we've just recently handled a few of them. It seems as the economy is improving, states are freeing up funds for these conservation easements. So what is a conservation easement? It is a perpetual easement that runs with your deed and requires you to relinquish your rights to develop a piece of property, usually open space. Property owners are compensated for this easement and it is usually all taxable so a 1031 exchange can be very advantageous.

Message from our President

Dear Friends,

Margo McDonnell


It has been an interesting month for 1031 Qualified Intermediaries (QIs) like 1031 CORP. The idea of a PA version of an exchange had us giddy about the benefits it creates for our clients and the Commonwealth, too. Whether you are a PA resident or own property in PA, please contact your state rep to let him or her know you support a PA like-kind exchange.


Moving across the river, we learned that a bill creating a registration program for QIs has resurfaced in New Jersey. This bill was introduced last year but did not go anywhere. It would require QIs to register with the state and pay a fee and among other things require minimum insurance coverage amounts and other option safeguards to protect the exchange funds a QI holds for its clients. 1031 CORP. welcomes such legislation and the protections it provides for New Jersey residents. The insurance coverage and safeguards already in place at 1031 CORP. far exceed the requirements included in this bill. The security of our clients' exchange funds is always our top priority and we have put safeguards in place to help our clients sleep comfortably at night without worrying about their funds.


Some of the protections in place include:

  • Funds deposited into a segregated, interest bearing FDIC-insured account with YOUR name and tax identification number;
  • Ability to view your account activity on the bank's website;
  • Account statements sent from the bank directly to you monthly;
  • Your signature required before 1031 CORP. can initiate any withdrawal;
  • Qualified Escrow Agreements always available at no additional charge; and
  • $2,500,000 fidelity bond and $2,000,000 professional liability coverage.

Of course, 1031 CORP. will keep you posted on both of these issues. If you want updates as we learn of them, just like us on Facebook or follow us on Twitter.


I am hoping that groundhog is right and Spring is just a few weeks away. I am very ready for some warmer weather and I am sure many of you are as well.


Kind regards,




PS:  If you own or are thinking of buying property at the South Jersey Shore, you will not want to miss next month's newsletter which will include information on the state of the current real estate market in your favorite Shore resort communities.

About 1031 CORP.
Serving as a nationwide qualified intermediary for 1031 tax-deferred exchanges since 1991, 1031 CORP. strives to provide a superior exchange experience for our customers and their advisors.  We provide our customers with enhanced security of funds, knowledgeable exchange professionals and a commitment to keep the exchange process simple for our customers and their advisors.  Every member of the exchange team is a Certified Exchange Specialist� and has the experience and expertise to facilitate even the most complex exchange transaction, including reverse, improvement and personal property exchanges.  Additional information can be found at www.1031CORP.com.
In This Issue
Pennsylvania Version of a 1031 Exchange May be Coming Soon
Installment Sale Treatment for Failed 1031 -- Maybe Not This
Wealth Building Webinar Series
CAUTION! You May Need to File an Extension
Trending this Month
Message from our President
2012 Exchange Reporting Guide
Article Exchange

Margo McDonnell

Margo McDonnell, CES
Certified Exchange Specialist
1.800.828.1031 ext. 212
Mobile: 610.680.6896
Find me on Facebook
View my profile on LinkedIn

1031 CORP. Logo

Sue Umstead, CES 
Certified Exchange Specialist
Senior Vice President
1.800.828.1031 ext. 208
Mobile: 610.755.8520

Find me on Facebook
View my profile on LinkedIn

1031 CORP. Logo

Marissa LoCascio, CES
Certified Exchange Specialist
Senior Exchange Officer
1.800.828.1031 ext. 210
Mobile: 610.742.4351

Find me on Facebook
View my profile on LinkedIn

Rich Heller

Richard Heller, Esq., CCIM, CES
Find me on Facebook
View my profile on LinkedIn

 Bettye Matthews

Bettye J. Matthews, CPA
View my profile on LinkedIn


Joseph F. Szajnecki, CES�
2012 Exchange Reporting Guide 
2012 Exchange Reporting Guide Cover Download our 2011 Exchange Reporting Guide here for information on reporting your 1031 exchange, when to file your tax return, when to file for an extension and other important tax reporting assistance!


Helping to Simplify the Reporting of your 1031 Exchange!

Article Exchange

Following are articles related to 1031 exchanges, taxes, real estate and related topics you may find of interest.  


Big money betting big on housing

CNN Money 

February 4, 2013


Top 2013 Real Estate Trends

Real Trends

February 11, 2013


CRE Sales Surge In 2012 As  

Pricing Recovery Spreads To  

More Markets 


February 13, 2013


Housing holds key to full job  

growth rebound

USA Today  

February 17 2013  


Home construction off to strong start 

CNN Money

February 20, 2013

If you have an article you would like to share, please forward it to
Margo McDonnell,CES� and we'll include it in next month's reading list.

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