What is a Qualified Intermediary (i.e., QI or Accommodator) and do I need one?
One of the reasons the IRS may disallow 1031 tax-deferred treatment for a transaction and re-characterize it as a taxable sale (and subsequently assess a capital gains tax) is by taking the position that the Exchangor received or could have received the sale proceeds from the disposition of the relinquished property, i.e., constructive receipt and/or actual receipt. The Treasury Regulations specifically allow for the use of a Qualified Intermediary (QI), also known as an Accommodator. The QI substitutes for or on behalf of the Exchangor as the seller or buyer, depending on which side of the transaction you are on, and hold the net sales proceeds from the sale of the relinquished property in a segregated Qualified Escrow Account until the replacement property transaction is ready to close. The Treasury Regulations contain certain safe harbor provisions that avoid the constructive or actual receipt issues when the Exchangor has retained and used a QI. The QI must be an independent entity
