[WSBARP] FW: 1031 Exchange question re: identifying replacement property

[John McCrady]

On behalf of Jeff Helsdon

John McCrady
Puget Sound Title Company
5350 Orchard Street West
University Place WA 98467
253-476-5721
j.mccrady at pstitle.com

From: Jeff Helsdon [mailto:jhelsdon at thehelsdonlawfirm.com]
Sent: Tuesday, September 19, 2017 4:04 PM
To: John McCrady <j.mccrady at pstitle.com>
Subject: FW: [WSBARP] 1031 Exchange question re: identifying replacement property



Cordially,

Jeffrey Paul Helsdon
(253) 564-1856 (Main)
(253) 414-3525 (Direct)
(253) 677-1031 (Cell)

From: Jeff Helsdon
Sent: Tuesday, September 19, 2017 10:50 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>; wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>
Subject: RE: [WSBARP] 1031 Exchange question re: identifying replacement property

In order to constitute a valid identification of replacement property, and thereby satisfy the identification requirement, the taxpayer must specifically identify the replacement property as replacement property in a written document and signed by the taxpayer.  Treas. Reg. Section 1.1031(k)-1(c)(2).  The taxpayer must either hand deliver, mail, fax, or otherwise send the signed identification document to a qualified recipient before the end of the identification period.  Treas. Reg. Section 1.1031(k)-1(c)(2).  A qualified recipient is (1) the person obligated to transfer the replacement property or (2) any other person involved in the exchange other than the taxpayer or a disqualified person (e.g., a qualified intermediary, an escrow agent, or a title company may constitute qualified recipients).  Treas. Reg. Section 1.1031(k)-1(c)(2)(i), (ii).  If all of the parties to an exchange sign the identification of the replacement property before the end of the identification period, the taxpayer will satisfy the delivery requirement.  Treas. Reg. Section 1.1031(k)-1(c)(2).

Backdating an identification constitutes tax fraud.  Dobrich v. Comm'r, 188 F.3d 512 (9th Cir. 1999).  Anyone willfully participating in that act is guilty of a felony and subject to a fine of up to $100,000.00 ($500,000.00 in the case of a corporation) and imprisonment of up to three years.  IRC Section 7206(2).

Cordially,

Jeffrey Paul Helsdon
(253) 564-1856 (Main)
(253) 414-3525 (Direct)
(253) 677-1031 (Cell)

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Marc Holmes
Sent: Tuesday, September 19, 2017 10:09 AM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>; wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>
Subject: [WSBARP] 1031 Exchange question re: identifying replacement property

Short version:  Is an offer to purchase sufficient identification of a replacement property for purposes of a 1031 exchange?

Client made an offer on a house contingent upon the sale of vacant land intending to do a 1031 exchange.  Seller wouldn't come down in price so it went nowhere.  The land sale subsequently closed and proceeds were received by a 1031 facilitator.  Later, client made a second offer on the property but again seller wouldn't budge.

Fast forward to today and seller is willing to accept client's offer but the 45 day period expired last Friday without client submitting anything formal to the 1031 facilitator to identify this or any other replacement property.

Facilitator is still holding the funds from the land sale and an employee thereof suggested back dating a new offer on the property to last Friday.  That seems unethical or worse so I'm wondering if there's another way.



Marc Holmes
Holmes Law Group PLLC
2303 W. Commodore Way, # 306
Seattle WA 98199
HolmesLawGroup.com<http://holmeslawgroup.com/>
marc at holmeslawgroup.com<mailto:marc at holmeslawgroup.com>
Ofc: 206-357-4224
Cell: 206-849-0853

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