Category: Company and Industry News

We published a https://www.accruit.com/blog/deadline-extension-1031-exchanges-due-covi… post on the IRS Extension Notice 2020-23 in April. Accruit and many others involved in the real estate industry were concerned about the https://www.accruit.com/blog/clarification-requested-irs-notice-2020-23… for clarification of portions of the Notice and we are still awaiting that clarification. Some benefited from the extension but others were forced to wait for distribution of exchange funds due to the wording of the Notice.
Many of our clients who were in the middle of their 1031 exchanges in early April probably hoped that issues created by the COVID-19 pandemic would be behind us by now. However, it is clear the reasons for the deadline extensions still abound.
Property owners and investors continue to deal with travel restrictions, property inspection delays, problems in viewing replacement properties, appraisal and financing delays, finding enough suitable replacement property inventory, etc. All of these issues are reasons the IRS and Treasury may consider additional extensions which may impact 1031 exchanges. We will continue to update our clients as we draw closer to July 15th and thereafter should any future extensions be issued.
In the meantime, we hope you enjoy the upcoming Independence Day Holiday!

https://cta-redirect.hubspot.com/cta/redirect/6205670/959852e4-dc2a-419… alt=”Questions about an exchange? Contact us.” class=”hs-cta-img” id=”hs-cta-img-959852e4-dc2a-4190-b67f-4cc1ed13478a” src=”https://no-cache.hubspot.com/cta/default/6205670/959852e4-dc2a-4190-b67…; style=”border-width:0px;” />

We published a https://www.accruit.com/blog/deadline-extension-1031-exchanges-due-covi… post on the IRS Extension Notice 2020-23 in April. Accruit and many others involved in the real estate industry were concerned about the https://www.accruit.com/blog/clarification-requested-irs-notice-2020-23… for clarification of portions of the Notice and we are still awaiting that clarification. Some benefited from the extension but others were forced to wait for distribution of exchange funds due to the wording of the Notice.
Many of our clients who were in the middle of their 1031 exchanges in early April probably hoped that issues created by the COVID-19 pandemic would be behind us by now. However, it is clear the reasons for the deadline extensions still abound.
Property owners and investors continue to deal with travel restrictions, property inspection delays, problems in viewing replacement properties, appraisal and financing delays, finding enough suitable replacement property inventory, etc. All of these issues are reasons the IRS and Treasury may consider additional extensions which may impact 1031 exchanges. We will continue to update our clients as we draw closer to July 15th and thereafter should any future extensions be issued.
In the meantime, we hope you enjoy the upcoming Independence Day Holiday!

https://cta-redirect.hubspot.com/cta/redirect/6205670/959852e4-dc2a-419… alt=”Questions about an exchange? Contact us.” class=”hs-cta-img” id=”hs-cta-img-959852e4-dc2a-4190-b67f-4cc1ed13478a” src=”https://no-cache.hubspot.com/cta/default/6205670/959852e4-dc2a-4190-b67…; style=”border-width:0px;” />

We published a https://www.accruit.com/blog/deadline-extension-1031-exchanges-due-covi… post on the IRS Extension Notice 2020-23 in April. Accruit and many others involved in the real estate industry were concerned about the https://www.accruit.com/blog/clarification-requested-irs-notice-2020-23… for clarification of portions of the Notice and we are still awaiting that clarification. Some benefited from the extension but others were forced to wait for distribution of exchange funds due to the wording of the Notice.
Many of our clients who were in the middle of their 1031 exchanges in early April probably hoped that issues created by the COVID-19 pandemic would be behind us by now. However, it is clear the reasons for the deadline extensions still abound.
Property owners and investors continue to deal with travel restrictions, property inspection delays, problems in viewing replacement properties, appraisal and financing delays, finding enough suitable replacement property inventory, etc. All of these issues are reasons the IRS and Treasury may consider additional extensions which may impact 1031 exchanges. We will continue to update our clients as we draw closer to July 15th and thereafter should any future extensions be issued.
In the meantime, we hope you enjoy the upcoming Independence Day Holiday!

https://cta-redirect.hubspot.com/cta/redirect/6205670/959852e4-dc2a-419… alt=”Questions about an exchange? Contact us.” class=”hs-cta-img” id=”hs-cta-img-959852e4-dc2a-4190-b67f-4cc1ed13478a” src=”https://no-cache.hubspot.com/cta/default/6205670/959852e4-dc2a-4190-b67…; style=”border-width:0px;” />

On June 11, 2020 the U. S. Treasury released

On June 11, 2020 the U. S. Treasury released

On June 11, 2020 the U. S. Treasury released

A IRS Notice 2020-23 and whether Affected Taxpayers may use postponement provisions of Section 17 in Rev. Proc. 2018-58.   
Section 17.02 provides in pertinent parts as follows:
(1) The last day of a 45-day identification period and the last day of a 180-day exchange period that fall on or after the date of a federally declared disaster are postponed by 120 days or to the last day of the general disaster extension period authorized by an IRS News Release or other guidance announcing tax relief for victims of the specific federally declared disaster, whichever is later. However, in no event may a postponement period extend beyond: (a) the due date (including extensions) of the taxpayer’s tax return for the year of the transfer (See §1.1031(k)-1(b)(2)(ii); or (b) one year (See section 7508A(a)).
The letter also requests that March 13, 2020 be deemed to be the beginning date of disaster relief for 1031 exchanges and that each day of the disaster period from March 13 to July 15 be treated as the date of the federally declared disaster.
Further, the FEA asked that if the end of the 45-day identification period or the end of the 180-day exchange period falls within the disaster period, that the deadlines to complete both of those actions be extended by 120 days or to July 15, 2020, whichever is later.
Lastly, we will need to wait and see whether we receive any opinion on if the extension provisions are mandatory or permissive.  The language in IRS 2020-23 automatically extends the 45 & 180 day periods until July 15.  We hope to obtain some clarity from the IRS about whether the taxpayer can elect to take the extension or conclude the exchange on such earlier date that the exchanger would have otherwise been able to.     
We will continue to keep up-to-date on all new information or documentation received in response to the joint letter dated April 20.  If you have questions about your exchange transactions, please contact your exhange manager or call us at 800-237-1031.

A IRS Notice 2020-23 and whether Affected Taxpayers may use postponement provisions of Section 17 in Rev. Proc. 2018-58.   
Section 17.02 provides in pertinent parts as follows:
(1) The last day of a 45-day identification period and the last day of a 180-day exchange period that fall on or after the date of a federally declared disaster are postponed by 120 days or to the last day of the general disaster extension period authorized by an IRS News Release or other guidance announcing tax relief for victims of the specific federally declared disaster, whichever is later. However, in no event may a postponement period extend beyond: (a) the due date (including extensions) of the taxpayer’s tax return for the year of the transfer (See §1.1031(k)-1(b)(2)(ii); or (b) one year (See section 7508A(a)).
The letter also requests that March 13, 2020 be deemed to be the beginning date of disaster relief for 1031 exchanges and that each day of the disaster period from March 13 to July 15 be treated as the date of the federally declared disaster.
Further, the FEA asked that if the end of the 45-day identification period or the end of the 180-day exchange period falls within the disaster period, that the deadlines to complete both of those actions be extended by 120 days or to July 15, 2020, whichever is later.
Lastly, we will need to wait and see whether we receive any opinion on if the extension provisions are mandatory or permissive.  The language in IRS 2020-23 automatically extends the 45 & 180 day periods until July 15.  We hope to obtain some clarity from the IRS about whether the taxpayer can elect to take the extension or conclude the exchange on such earlier date that the exchanger would have otherwise been able to.     
We will continue to keep up-to-date on all new information or documentation received in response to the joint letter dated April 20.  If you have questions about your exchange transactions, please contact your exhange manager or call us at 800-237-1031.

A IRS Notice 2020-23 and whether Affected Taxpayers may use postponement provisions of Section 17 in Rev. Proc. 2018-58.   
Section 17.02 provides in pertinent parts as follows:
(1) The last day of a 45-day identification period and the last day of a 180-day exchange period that fall on or after the date of a federally declared disaster are postponed by 120 days or to the last day of the general disaster extension period authorized by an IRS News Release or other guidance announcing tax relief for victims of the specific federally declared disaster, whichever is later. However, in no event may a postponement period extend beyond: (a) the due date (including extensions) of the taxpayer’s tax return for the year of the transfer (See §1.1031(k)-1(b)(2)(ii); or (b) one year (See section 7508A(a)).
The letter also requests that March 13, 2020 be deemed to be the beginning date of disaster relief for 1031 exchanges and that each day of the disaster period from March 13 to July 15 be treated as the date of the federally declared disaster.
Further, the FEA asked that if the end of the 45-day identification period or the end of the 180-day exchange period falls within the disaster period, that the deadlines to complete both of those actions be extended by 120 days or to July 15, 2020, whichever is later.
Lastly, we will need to wait and see whether we receive any opinion on if the extension provisions are mandatory or permissive.  The language in IRS 2020-23 automatically extends the 45 & 180 day periods until July 15.  We hope to obtain some clarity from the IRS about whether the taxpayer can elect to take the extension or conclude the exchange on such earlier date that the exchanger would have otherwise been able to.     
We will continue to keep up-to-date on all new information or documentation received in response to the joint letter dated April 20.  If you have questions about your exchange transactions, please contact your exhange manager or call us at 800-237-1031.

March 31st we posted a blog providing detailed information regarding a request from a coalition of interested real estate groups to the IRS to provide some relief to taxpayers on mandated exchange deadlines.  On April 9, 2020, the IRS issued https://www.irs.gov/pub/irs-drop/n-20-23.pdf”>Notice 2020-23 Providing Additional Relief for Taxpayers Affected by the COVID-19 Pandemic.  Affected Taxpayers performing Section 1031 exchanges are included in the amplified relief.  Among other subjects, this Notice extends the 45-day identification period and the 180-day exchange period for taxpayer/exchangers whose deadlines were due on or after April 1, 2020. The deadlines for those exchangers to identify replacement property and/or acquire replacement property are now July 15, 2020.  It is important to note there is no retroactive effect if a taxpayer’s 45-day identification deadline and 180-day exchange period ended before April 1, 2020.  Many expected the relief would be retroactive to an earlier time when the effect of the virus was making adherence to the deadlines difficult but such is not the case.
Section 1031 rules require potential replacement properties to be timely identified on or before midnight of the 45th day following the sale of the relinquished property.  The taxpayer must then close on the purchase of the designated replacement property within 180 days of the relinquished property sale. 
Accruit has previously provided a summary of the rules pertaining to extensions of exchange transactions due to federally declared disasters. However, Notice 2020-23 is somewhat confusing to taxpayers and their professionals because it is not written like previous Disaster Relief Notices.  Particularly, Notice 2020-23 does not expressly reference Section 17 of Rev. Proc. 2018-58.  In the absence of an express reference to Section 17, it appears the normal 120-day extension from the date of the federally declared disaster does not apply to the current COVID-19 pandemic. 
While this may not be the relief for which many taxpayers hoped, Accruit is thankful the IRS acted quickly on the letter request directed to IRS/Treasury in late March by the coalition including the https://www.1031.org/”>Federation of Exchange Accommodators (FEA), of which Accruit is a member.  At this time we don’t know whether Notice 2020-23 will be the final guidance the IRS issues related to the 45-day identification period and the 180-day exchange period.  Though the Notice provides some relief to taxpayers with pending exchanges,  several issues are left unresolved or unclear.  Accruit’s representatives on the Government Affairs Committee of the FEA, are working with others to seek clarification regarding some of the open items and possibly request the IRS change the start date of the extension to January 20, 2020 (the date of the FEMA disaster declaration) or March 13, 2020 (the date of the Stafford Act/FEMA declaration). 
If you have any specific questions about this relief, please contact your client service person at Accruit.  The information contained in this article is not to be considered tax or legal advice and taxpayers should consult independent counsel with regard to the particular matter; however, Accruit will continue to monitor the situation closely and share any information on further extensions or modifications as soon as they become available. You may also continue to check on Accruit’s website for any further updates.