Can a taxpayer purchase the replacement property in a different name/entity than the entity which owned the Relinquished Property?
As a general rule, the person or entity selling the Relinquished Property must be the same entity which purchases the Replacement Property. If a corporation or partnership owns the relinquished property, then the same entity must purchase the replacement property. However, many times some, but not all of the shareholders or partners desire to complete an exchange; the others desire to cash out. In such instances, recent holdings suggest that it is acceptable for an individual shareholder or partner to complete an exchange for his/her interest in the property as long as the corporation or partnership is dissolved prior to the closing and the real property divided among the shareholders or partners as tenants in common. Thereafter, each shareholder or partner can sell or exchange their undivided interest in the relinquished property at their discretion (many commentators previously questioned whether the “held for” test would be violated by an ownership entity that conveyed property to i
Related Questions
- Can I take advantage of a 1031 Exchange if I want to acquire a replacement property in a different state than the relinquished property is located?
- How much replacement property must a taxpayer purchase to fully defer capital gains taxes?
- How long does a taxpayer have to complete the purchase of its Replacement Property?
