Taxpayer Uses Attorney Son as QI
1031 Exchange Fails; Taxes Due
In Blangiardov. Commissioner, T.C., No. 11978-13, T.C. Memo. 2014-110, 6/9/14, the taxpayer owed tax on a $1,366,993 gain as well as accuracy-related penalty of $273,397.20 related to a deficiency on his 2008 Federal income tax return, the year he reported a 1031 tax-deferred exchange.
Here a few facts about the case:
- In 1988, taxpayer Frank Blangiardo and his wife purchased a residential property for $488,000.
- Taxpayer divorced and paid ex-wife $500,000 as part of settlement in 2000. She agreed to waive all rights to the property.
- Taxpayer remarried and then divorced another wife in 2006. She was paid $80,000 and agreed to waive all rights to the property.
- As part of a 1031 exchange, taxpayer sold the property for $2,250,000 and acquired unimproved land as replacement property.
- Taxpayer used his son who is an attorney to serve as the qualified intermediary (QI).
- Taxpayer claimed the $580,000 paid to his ex-wives increased his basis in the relinquished property under section 1041 (transfers of property between spouses).
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FEA Launches Website to Aid in Effort to Preserve Section 1031
 The Federation of Exchange
Accommodators (FEA),
the national trade association for 1031 exchange practitioners, launched a website which will be a central place to stay informed, participate and advocate for the section 1031 industry relating to tax reform and the proposed repeal of section 1031.
Please visit the new website where you will find information about the legislative proposals that severely limit or call for the outright repeal of IRC �1031 and like-kind exchanges. The website also offers a central location to educate and advocate for the �1031 industry regarding the legislative and Administration proposals. Contact your lawmakers through the website, voice your opposition to the proposals, and let them know how �1031 exchanges benefit you or your clients.
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Trending this Month...
Seller of Replacement Property Financing the Acquisition
More and more Exchangers are having the seller of the replacement property finance the acquisition instead of using a traditional lender. For the seller, they can report the sale as an installment sale and receive some tax benefits. The Exchanger must be sure to reinvest all net equity into replacement property before financing.
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The first Thursday of each month, we offer our complementary 1031 Exchanges Made Easy webinar as part of our Wealth Building Webinar Series designed to help you build and preserve wealth. Weekly webinars will start back up in September.
Register today!
July 10th: 1031 Exchanges Made Easy
August 7th: 1031 Exchanges Made Easy
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We continue to get questions about Structured Sales so we continue to run this article.
Structured Sales Offer 1031 Alternative
Tax-Deferral Strategy Opens New Options
A  "Structured Sale" is an improved version of the traditional installment sale provisions in IRC �453. Instead of receiving a lump sum cash payment upon the sale of the property, the seller receives installment payments spread over a number of years and the gain is deferred over the life of the note with taxes only due when payments are received. A Structured Sale combines the security of a cash sale with the tax benefits of an installment sale.
Read more about Structures Sales
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Message from our President
 | | Margo McDonnell |
Dear Friends,
AHHHH! Summertime! The beautiful weekend weather continued for the Mid-Atlantic states. Truth be told, I am writing while in Ocean City, NJ - one of my family's favorite places - watching the boats on the bay. Sitting on the beach as I did earlier today, I always seem to do a lot of daydreaming about the goals my husband I have and I can't help but think of the many opportunities 1031 exchanges create for investors and business owners in resort areas such as this. Whether you have investment property here in Ocean City, on the Florida coast or the mountains of Central Oregon, exchanges give you the ability to trade up into a better property with higher income potential. It also gives others the chance to exchange into their first property in that area. And it also gives you the opportunity to convert your investment property into your vacation home or even a primary residence. I think I could get used to this!
Even if it is sitting on your back deck, wherever your favorite summertime place is, I hope you enjoy quality time there with family and friends. And if you are a soccer fan, too, I hope you catch some of the World Cup games. Go USA!
Warm regards,
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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. |
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Margo McDonnell, CES�
Certified Exchange Specialist�
President
1.800.828.1031 ext. 212
Mobile: 610.680.6896
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Sue Umstead, CES�
Certified Exchange Specialist�
Senior Vice President
1.800.828.1031 ext. 208
Mobile: 610.755.8520
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Marissa LoCascio, CES�
Certified Exchange Specialist�
Vice President
1.800.828.1031 ext. 210
Mobile: 610.742.4351
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Sanna Phinney, CES�
Certified Exchange Specialist�
Senior Vice President
1.800.828.1031 ext. 230
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Richard Heller, Esq., CCIM, CES�
Consultant
1.800.734.1031
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Bettye J. Matthews, CPA
Consultant
1.800.680.1031
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Joseph F. Szajnecki, CES�
Consultant
1.800.734.1031 |
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