Webinar Review: 1031 Tax-deferred Exchanges

1.

How many days does a taxpayer have to identify a replacement property in order to have a tax-deferred exchange?

A.

60 days
B.

90 days
C.

45 days
D.

180 days
E.

None of the above

Correct Answer
C. 45 days

Explanation
C is the correct answer because once the relinquished property is transferred the taxpayer has only 45 calendar days to identify a replacement property. The taxpayer has 180 calendar days to close on the replacement property. There are no regulations for 60 or 90 days in a 1031 tax-deferred exchange.

Rate this question:

2.

How long must property be held when the transfer is between related parties?

A.

5 years
B.

1 year
C.

3 years
D.

2 years
E.

None of the above

Correct Answer
D. 2 years

Explanation
D is the correct answer because property transferred between related parties in a tax-deferred exchange must be held for at least 2 years by both parties. If either party sells the replacement property before the 2 year period, the tax-deferred exchange is disqualified for both parties.

Rate this question:

3.

Who is a related party for purposes of a tax-deferred exchange?

A.

Spouses
B.

Brothers
C.

Ancestors (parents and grandparents)
D.

Corporation of partnership and a person who owns more than 50% interest in the entity
E.

A, B, and C are correct
F.

All of the above

Correct Answer
F. All of the above

Explanation
F is correct because all of the above is correct. A related party for purposes of a 1031 tax-deferred exchange includes relatives, and anyone who within a two year period prior to the exchange has acted as your attorney, accountant, real estate broker, or agent. Related parties also include any person who owns 50% or more interest of a corporation or partnership that is involved in a tax-deferred exchange.

Rate this question:

4.

Which Revenue Procedure allows for a vacation home to qualify for a tax-deferred exchange if certain requirements are met?

A.

Rev. Proc. 90-34
B.

Rev. Proc. 2010-14
C.

Rev. Proc. 2008-16
D.

Rev. Proc. 2007-56
E.

None of the above

Correct Answer
C. Rev. Proc. 2008-16

Explanation
C is the correct answer because only Rev. Proc. 2008-16 allows for a vacation property to be exchanged in a 1031 tax-deferred exchange.

Rate this question:

5.

How long must you own a vacation property before and after the exchange in order to qualify for as a tax-deferred exchange?

A.

6 months
B.

12 months
C.

24 months
D.

36 months
E.

None of the above

Correct Answer
C. 24 months

Explanation
C is the correct answer because a taxpayer who owns a vacation home must first meet the personal use requirements in order to sell their property in a tax-deferred exchange. If they meet the personal use requirements they must also own the relinquished property for at least 24 months and own the replacement property for at least 24 months.

Rate this question:

6.

Which legislation signed by President Obama created a new agency “Bureau of Consumer Financial Protection” that will regulate Qualified Intermediaries?

A.

Affordable Care Act
B.

Dodd-Frank Wall Street Reform and Consumer Protection Act
C.

Consumer Protection Act
D.

Protecting Taxpayer Advocacy Act
E.

None of the above

Correct Answer
B. Dodd-Frank Wall Street Reform and Consumer Protection Act

Explanation
B is the correct answer because only the Dodd-Frank Wall Street Reform and Consumer Protection Act regulates Qualified Intermediaries. Title X of the bill specifically regulates QI’s.

Rate this question: