Like-kind exchanges

IRS Clarifies Deadlines for Like-kind Exchanges

Notice 2020-23

In an answer to a question posted on its website, the IRS has clarified that Code §1031 exchange deadlines that fell on or after April 1, 2020 and before July 15, 2020 are not extended beyond July 15, 2020.

Background: Generally, a taxpayer does not recognize gain or loss on the exchange of real property (but not tangible personal property after 2017) held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment. But, to qualify as a 1031 exchange, the replacement property generally must be identified within 45 days (i.e., 45-day deadline), and that exchange must be completed no more than 180 days (i.e., 180-day deadline) after the transfer of the relinquished property (i.e., the LKE “deferred Starker rules”).

Notice 2020-23: The IRS extended the due dates for performing “certain time-sensitive acts” because of the COVID-19 pandemic. For example, the IRS postponed, to July 15, 2020, almost all federal tax filing and payment obligations due to be performed on or after April 1, 2020 and before July 15, 2020.

 

Authored by:

Dr. John Connors, JD, CPA, LLM

Tax Educator’s Network, Inc.

[email protected]

 

For subscription information on Dr. John Connors’ educational materials, click here.

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