[WSBAPT] Q re 1031

[Mark Higgins]

There is a requirement that the replacement property be "held for
investment.​"  You might do some research on this in a situation where the
taxpayer already intends to transfer the property at the time he receives
it.

Mark

On Mon, Feb 8, 2016 at 6:16 AM, Jennifer Sohn <jennifer at sohn-law.com> wrote:

> I see, thanks for the clarification.
>
> Sent from my iPhone
>
> On Feb 7, 2016, at 11:25 PM, John J. Sullivan <sullaw at comcast.net> wrote:
>
> I don't see the basis or incentive for trying to impose the step
> transaction doctrine or the new substantiality doctrine as long as the
> deferred 1031 transaction is "old and cold" when the 721 transaction is
> carried out. It just has to be the same person receiving the replacement
> property. What he does with it next is an independent transaction.
>
> John Sullivan
>
> Sent from my iPhone
>
> On Feb 7, 2016, at 10:07 PM, Jennifer Sohn <jennifer at sohn-law.com> wrote:
>
> Thanks. So, under 1031, even though my client could not have purchased
> through a family LLC, it is still okay to put his interest into a family
> LLC soon after closing? I just wanted to make sure that I avoid any step
> transaction type argument by the IRS. Would appreciate your thoughts on
> this.
>
> Thanks,
>
>
> On Sun, Feb 7, 2016 at 4:51 PM, John J. Sullivan <sullaw at comcast.net>
> wrote:
>
>> The RLT is a disregarded entity, so it doesn't matter if he or the RLT
>> take title to the substitute property.
>>
>> Not so the family LLC. I would make sure the two steps are separate
>> transactions. Maybe wait a months before contributing the new property to
>> the LLC. All should do it at once so Sec. 721 treatment is clear.
>>
>> John Sullivan
>>
>> Sent from my iPhone
>>
>> On Feb 7, 2016, at 4:38 PM, Jennifer Sohn <jennifer at sohn-law.com> wrote:
>>
>> I have a client who is engaging in a 1031 exchange. He recently sold real
>> property that he owned through his living trust. In purchasing the
>> replacement property, my understanding is that he needs to purchase it
>> through his living trust (because that is who sold the relinquished
>> property) or through an LLC where the living trust is a sole member. He
>> will purchase the replacement property with his children as
>> tenants-in-common.
>>
>> Soon after the 1031 exchange, he is planning on setting up an LLC with
>> his living trust and his children (the tenants-in-common) as members. Does
>> this transaction (putting his interest into an LLC that is owned not solely
>> by the living trust but also his children) affect the 1031 tax deferral? My
>> understanding is that he would not be able to purchase through an LLC that
>> has multi-members, so I am wondering if he is able to do that right after
>> the 1031 exchange closes.
>>
>> Thanks.
>>
>>
>>
>> --
>>
>> Best regards,
>>
>>
>>
>> Jennifer Y. Sohn
>>
>> Attorney at Law
>>
>> (Licensed in CA and WA)
>>
>> Sohn Law PLLC
>>
>> 10900 NE 4th Street, Suite 1850
>>
>> Bellevue, WA 98004
>>
>> Tel: 206.617.7874
>>
>> Fax: 425.732.9748
>>
>> Email: jennifer at sohn-law.com
>>
>> http://www.sohn-law.com
>>
>>
>>
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>>
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>
>
>
> --
>
> Best regards,
>
>
>
> Jennifer Y. Sohn
>
> Attorney at Law
>
> (Licensed in CA and WA)
>
> Sohn Law PLLC
>
> 10900 NE 4th Street, Suite 1850
>
> Bellevue, WA 98004
>
> Tel: 206.617.7874
>
> Fax: 425.732.9748
>
> Email: jennifer at sohn-law.com
>
> http://www.sohn-law.com
>
>
>
> Confidential. This electronic mail transmission and any accompanying
> documents contain information belonging to the sender which may be
> confidential and legally privileged. This information is intended only for
> the use of the individual or entity to whom this electronic mail
> transmission was sent as indicated above. If you are not the intended
> recipient, any disclosure, copying, distribution, or action taken in
> reliance on the contents of the information contained in this transmission
> is strictly prohibited. If you have received this transmission in error,
> please delete the message. Thank you.
>
>
>
> Circular 230 Disclaimer. Any U.S. federal tax advice contained in this
> communication (including any attachments) is not intended or written to be
> used, and may not be used, for the purpose of (i) avoiding penalties under
> the internal revenue code or (ii) promoting, marketing or recommending to
> another party any transaction or matter addressed herein.
>
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-- 
Mark T. Higgins
Mark T. Higgins, P.C.
P.O. Box 57
Darrington, WA 98241
206-491-2420
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