Category: Company and Industry News

Professional QIs Are Central to 1031 Exchanges and Help a Wide Variety of Asset Owners
Las Vegas, Nevada (September 15, 2016)
The U.S. Treasury rules giving rise to the like-kind exchange “Qualified Intermediary” turn 25 this year. Established by Treasury safe harbor regulations in 1991, professional Qualified Intermediaries (QIs) promote compliance with the law and make the benefits of like-kind exchanges, also known as 1031 exchanges, accessible to business and property owners nationwide.
QIs act as independent third-party principals in 1031 exchange transactions. “QIs are equal parts facilitator, educator, and compliance officer,” said Margo McDonnell, president of 1031 CORP., a Philadelphia-based Qualified Intermediary, and outgoing president of the Federation of Exchange Accommodators (FEA), the national 1031 exchange trade association for QIs. “Taxpayers benefit from the guidance Qualified Intermediaries provide. The strict requirement of Internal Revenue Code Section 1031 must be met for an exchange to be approved by the IRS. Without the guidance of Qualified Intermediaries, investors would see many more like-kind exchanges disqualified, negatively affecting business reinvestment and job growth. This would also increase the risk of abuse,” said McDonnell, speaking from the FEA 2016 Annual Conference in Las Vegas on September 14, 2016.
FEA member Qualified Intermediaries help taxpayers of all sizes efficiently redeploy capital across the country, leading to job creating spending in local communities. Professional QIs simplify the exchange transaction for all parties, including the asset owners seeking 1031 tax deferral as well as their tax/legal advisors, the closing officer preparing the closing statements, and real estate professionals assisting the taxpayer. “Investors often need input to understand the strict rules of identification and other procedural issues,” said McDonnell, “QIs are integral to the efficiency of the process.”
Encouraging active and ongoing reinvestment in property were central to Congress’ original intent for enacting the tax deferral status of IRC Section 1031 in 1921. Under the rules, a taxpayer completing an exchange cannot have receipt of the funds from a sale without creating a taxable event. Professional QIs ensure that the sale proceeds are properly restricted. Any funds unused for reinvestment are returned to the taxpayer at termination of the exchange and this portion is then taxable.
The rise of the professional QI in the last 25 years has given small investors valuable assistance in complying with IRC 1031s provisions, while providing a check on exuberant investors trying to abuse the tax code. While larger assets are routinely exchanged, a 2011 survey of members of the Federation of Exchange Accommodators found that more than a third of exchange transactions were below $500,000. “Through Section 1031, many asset owners are exchanging to build or preserve their life savings. We see a significant amount of middle class taxpayers exchanging single family rental homes, farmland, and construction equipment. There’s no doubt that Section 1031 promotes investment in small to medium sized businesses. Most QIs are small businesses, themselves,” said Steve Chacon, incoming president of the FEA and a vice president at Accruit, a national QI firm based in Denver. Typical fees for a Qualified Intermediary’s services are between $750 and $1500 per exchange.
California and Colorado see the highest number of exchange transactions each year, but the use of 1031 exchanges is widespread across the country. QIs facilitate exchanges nationally in many industries, including both residential investment real estate and commercial real estate, construction, the vehicle/equipment rental and leasing industries, transportation, agriculture, farming and ranching and other industries.
About the Federation of Exchange Accommodators (FEA)
The FEA (www.1031.org), whose tagline is “The Voice of the 1031 Industry,” is a national trade association representing professionals who conduct like-kind exchanges under Internal Revenue Code Section 1031. Members of the association include Qualified Intermediary firms, title companies, their primary tax and legal counsel, and affiliated industries (TIC sponsors, banks, real estate brokers, title companies, settlement/escrow agents, etc.). The FEA helps QIs raise the professional quality of their services while keeping their fees affordable for small investors. The FEA offers professional QIs the opportunity to demonstrate their experience, technical expertise and commitment to ethical practices by obtaining the Certified Exchange Specialist® (CES®) designation. The designation requires a QI to have three years’ full-time experience as a QI, to pass a rigorous knowledge exam, and to adhere to a strict code of ethics.
FEA Contacts
Margo McDonnell
1031 CORP.
Providence Corporate Center
100 Springhouse Drive, Suite 203
Collegeville, PA 19426
Toll-free: (800) 828-1031
Local: (610) 792-4880
Fax: (610) 489-4366
mailto:margo@1031corp.com”>margo@1031corp.commailto:stevec@accruit.com”>stevec@accruit.com

Professional QIs Are Central to 1031 Exchanges and Help a Wide Variety of Asset Owners
Las Vegas, Nevada (September 15, 2016)
The U.S. Treasury rules giving rise to the like-kind exchange “Qualified Intermediary” turn 25 this year. Established by Treasury safe harbor regulations in 1991, professional Qualified Intermediaries (QIs) promote compliance with the law and make the benefits of like-kind exchanges, also known as 1031 exchanges, accessible to business and property owners nationwide.
QIs act as independent third-party principals in 1031 exchange transactions. “QIs are equal parts facilitator, educator, and compliance officer,” said Margo McDonnell, president of 1031 CORP., a Philadelphia-based Qualified Intermediary, and outgoing president of the Federation of Exchange Accommodators (FEA), the national 1031 exchange trade association for QIs. “Taxpayers benefit from the guidance Qualified Intermediaries provide. The strict requirement of Internal Revenue Code Section 1031 must be met for an exchange to be approved by the IRS. Without the guidance of Qualified Intermediaries, investors would see many more like-kind exchanges disqualified, negatively affecting business reinvestment and job growth. This would also increase the risk of abuse,” said McDonnell, speaking from the FEA 2016 Annual Conference in Las Vegas on September 14, 2016.
FEA member Qualified Intermediaries help taxpayers of all sizes efficiently redeploy capital across the country, leading to job creating spending in local communities. Professional QIs simplify the exchange transaction for all parties, including the asset owners seeking 1031 tax deferral as well as their tax/legal advisors, the closing officer preparing the closing statements, and real estate professionals assisting the taxpayer. “Investors often need input to understand the strict rules of identification and other procedural issues,” said McDonnell, “QIs are integral to the efficiency of the process.”
Encouraging active and ongoing reinvestment in property were central to Congress’ original intent for enacting the tax deferral status of IRC Section 1031 in 1921. Under the rules, a taxpayer completing an exchange cannot have receipt of the funds from a sale without creating a taxable event. Professional QIs ensure that the sale proceeds are properly restricted. Any funds unused for reinvestment are returned to the taxpayer at termination of the exchange and this portion is then taxable.
The rise of the professional QI in the last 25 years has given small investors valuable assistance in complying with IRC 1031s provisions, while providing a check on exuberant investors trying to abuse the tax code. While larger assets are routinely exchanged, a 2011 survey of members of the Federation of Exchange Accommodators found that more than a third of exchange transactions were below $500,000. “Through Section 1031, many asset owners are exchanging to build or preserve their life savings. We see a significant amount of middle class taxpayers exchanging single family rental homes, farmland, and construction equipment. There’s no doubt that Section 1031 promotes investment in small to medium sized businesses. Most QIs are small businesses, themselves,” said Steve Chacon, incoming president of the FEA and a vice president at Accruit, a national QI firm based in Denver. Typical fees for a Qualified Intermediary’s services are between $750 and $1500 per exchange.
California and Colorado see the highest number of exchange transactions each year, but the use of 1031 exchanges is widespread across the country. QIs facilitate exchanges nationally in many industries, including both residential investment real estate and commercial real estate, construction, the vehicle/equipment rental and leasing industries, transportation, agriculture, farming and ranching and other industries.
About the Federation of Exchange Accommodators (FEA)
The FEA (www.1031.org), whose tagline is “The Voice of the 1031 Industry,” is a national trade association representing professionals who conduct like-kind exchanges under Internal Revenue Code Section 1031. Members of the association include Qualified Intermediary firms, title companies, their primary tax and legal counsel, and affiliated industries (TIC sponsors, banks, real estate brokers, title companies, settlement/escrow agents, etc.). The FEA helps QIs raise the professional quality of their services while keeping their fees affordable for small investors. The FEA offers professional QIs the opportunity to demonstrate their experience, technical expertise and commitment to ethical practices by obtaining the Certified Exchange Specialist® (CES®) designation. The designation requires a QI to have three years’ full-time experience as a QI, to pass a rigorous knowledge exam, and to adhere to a strict code of ethics.
FEA Contacts
Margo McDonnell
1031 CORP.
Providence Corporate Center
100 Springhouse Drive, Suite 203
Collegeville, PA 19426
Toll-free: (800) 828-1031
Local: (610) 792-4880
Fax: (610) 489-4366
mailto:margo@1031corp.com”>margo@1031corp.commailto:stevec@accruit.com”>stevec@accruit.com

Professional QIs Are Central to 1031 Exchanges and Help a Wide Variety of Asset Owners
Las Vegas, Nevada (September 15, 2016)
The U.S. Treasury rules giving rise to the like-kind exchange “Qualified Intermediary” turn 25 this year. Established by Treasury safe harbor regulations in 1991, professional Qualified Intermediaries (QIs) promote compliance with the law and make the benefits of like-kind exchanges, also known as 1031 exchanges, accessible to business and property owners nationwide.
QIs act as independent third-party principals in 1031 exchange transactions. “QIs are equal parts facilitator, educator, and compliance officer,” said Margo McDonnell, president of 1031 CORP., a Philadelphia-based Qualified Intermediary, and outgoing president of the Federation of Exchange Accommodators (FEA), the national 1031 exchange trade association for QIs. “Taxpayers benefit from the guidance Qualified Intermediaries provide. The strict requirement of Internal Revenue Code Section 1031 must be met for an exchange to be approved by the IRS. Without the guidance of Qualified Intermediaries, investors would see many more like-kind exchanges disqualified, negatively affecting business reinvestment and job growth. This would also increase the risk of abuse,” said McDonnell, speaking from the FEA 2016 Annual Conference in Las Vegas on September 14, 2016.
FEA member Qualified Intermediaries help taxpayers of all sizes efficiently redeploy capital across the country, leading to job creating spending in local communities. Professional QIs simplify the exchange transaction for all parties, including the asset owners seeking 1031 tax deferral as well as their tax/legal advisors, the closing officer preparing the closing statements, and real estate professionals assisting the taxpayer. “Investors often need input to understand the strict rules of identification and other procedural issues,” said McDonnell, “QIs are integral to the efficiency of the process.”
Encouraging active and ongoing reinvestment in property were central to Congress’ original intent for enacting the tax deferral status of IRC Section 1031 in 1921. Under the rules, a taxpayer completing an exchange cannot have receipt of the funds from a sale without creating a taxable event. Professional QIs ensure that the sale proceeds are properly restricted. Any funds unused for reinvestment are returned to the taxpayer at termination of the exchange and this portion is then taxable.
The rise of the professional QI in the last 25 years has given small investors valuable assistance in complying with IRC 1031s provisions, while providing a check on exuberant investors trying to abuse the tax code. While larger assets are routinely exchanged, a 2011 survey of members of the Federation of Exchange Accommodators found that more than a third of exchange transactions were below $500,000. “Through Section 1031, many asset owners are exchanging to build or preserve their life savings. We see a significant amount of middle class taxpayers exchanging single family rental homes, farmland, and construction equipment. There’s no doubt that Section 1031 promotes investment in small to medium sized businesses. Most QIs are small businesses, themselves,” said Steve Chacon, incoming president of the FEA and a vice president at Accruit, a national QI firm based in Denver. Typical fees for a Qualified Intermediary’s services are between $750 and $1500 per exchange.
California and Colorado see the highest number of exchange transactions each year, but the use of 1031 exchanges is widespread across the country. QIs facilitate exchanges nationally in many industries, including both residential investment real estate and commercial real estate, construction, the vehicle/equipment rental and leasing industries, transportation, agriculture, farming and ranching and other industries.
About the Federation of Exchange Accommodators (FEA)
The FEA (www.1031.org), whose tagline is “The Voice of the 1031 Industry,” is a national trade association representing professionals who conduct like-kind exchanges under Internal Revenue Code Section 1031. Members of the association include Qualified Intermediary firms, title companies, their primary tax and legal counsel, and affiliated industries (TIC sponsors, banks, real estate brokers, title companies, settlement/escrow agents, etc.). The FEA helps QIs raise the professional quality of their services while keeping their fees affordable for small investors. The FEA offers professional QIs the opportunity to demonstrate their experience, technical expertise and commitment to ethical practices by obtaining the Certified Exchange Specialist® (CES®) designation. The designation requires a QI to have three years’ full-time experience as a QI, to pass a rigorous knowledge exam, and to adhere to a strict code of ethics.
FEA Contacts
Margo McDonnell
1031 CORP.
Providence Corporate Center
100 Springhouse Drive, Suite 203
Collegeville, PA 19426
Toll-free: (800) 828-1031
Local: (610) 792-4880
Fax: (610) 489-4366
mailto:margo@1031corp.com”>margo@1031corp.commailto:stevec@accruit.com”>stevec@accruit.com

TheRead the letter to Secretary Clinton here.

TheRead the letter to Secretary Clinton here.

TheRead the letter to Secretary Clinton here.

While congressmen and women are out campaigning, congressional staff continue to work in the area of tax reform.  As part of Accruit’s continued advocacy efforts on behalf of our real estate and personal property LKE clients and as co-chair of the Senate Finance Committee, both of which determine U.S. tax policy.
House Ways & Means Draft Blueprint for Tax Reform
Earlier this year, House Ways & Means Chairman Kevin Brady, (R-TX) introduced the draft blueprint for comments and, learning from the experiences of past Chairman Dave Camp, is soliciting input on the blueprint from members of Congress, the business community, and other interested groups prior to voting out of committee.   I’d like to highlight several points in the draft House Blueprint that could impact your business:
100% Immediate Expensing
Accelerating write-offs of capital assets is not a new expansion method and is still very popular.  The idea dates back to the 1980s, and more recently we have seen bonus depreciation as a widely accepted form of this.  But there are areas that the blueprint does not yet specify. 
Eligibility for new and used assets: Though the House Ways & Means Committee is currently silent, comments from senior staff indicate a preference to include all assets, new and used, except land..  Excluding land may cause complications when allocating cost between land and buildings. Also, excluding land could prove problematic when it comes to maintaining a reasonable debt-to-equity ratio when funding projects up front. There are also indications of further exclusions for certain classes of assets, but details are still unavailable.
No interest deductibility:  100% immediate expensing is costly, so the funds for the blueprint would come partially come from eliminating interest deductions on debt.  For our clients whose business model requires a higher debt-to-equity ratio, such a measure would make supporting growth initiatives or even maintaining current operations difficult. 
Potential elimination of 1031 like-kind exchanges:  Ways & Means senior staff indicated that while the elimination of like-kind exchanges is not currently drafted, it is still up for consideration as offset to cover the plan. During our meetings, we made very strong points as to why 1031 like-kind exchanges need to remain intact, should this bill move forward.

Not all companies would choose 100% expensing.  Depending on a company’s tax situations, immediate write-offs for tax purposes may not provide the flexibility needed to achieve company goals.  
Not all states may recognize 100% expensing for state tax purposes.  Like-kind exchanges must be the vehicle to defer gain recognition at the state level.
Not all assets may fall into 100% expensing categories.  Absent 1031s, per the independent studies regarding repeal of 1031s, a contraction may occur in GDP due to the lock-in effect if assets’ sales trigger gains and there is no means of deferral.
If land is not eligible for immediate expensing, then 1031s must remain the vehicle to defer gain recognition and encourage subsequent investment.

Senator Wyden’s Pooling Proposal
The pooling proposal from minority leader of the Senate Finance Committee, Senator Ron Wyden (D-OR), is another draft proposal worthy of continual monitoring. Election pundits suggest we may see a flip in the Senate from Republican to Democrat, placing Senator Wyden as chairman of the committee. 
There are some new ideas for U.S. tax code in Wyden’s draft, the basis of which has its roots in Canadian tax policy.  Wyden’s plan attempts to simplify depreciation calculations by pooling like assets in large groups (though FEA coalition members indicate the need to continue track assets on an individual basis negating most, if not all, of the simplification message).   
Unlike past Senate proposals, Wyden does not eliminate 1031s.  In fact, he continues to be a big supporter of the ability to defer gain recognition to encourage reinvestment.  As we continue our dialog with committee members, applauding the retention of 1031s, we want to better understand how a new pooling regime provides the much-touted simplification while protecting the integrity and spirit of 1031 exchanges.     
Avoid Unintended Consequences
Accruit continues to invest in advocacy efforts, hoping to connect the dots when tax reform bills are introduced so that you, our clients, will be informed on the details and not rely solely on the headlines.  While in DC we constantly state our goal of avoiding unintended consequences.  Members of Congress who introduce ideas that not only disrupt your business, but ours as well, need to understand the real implication of bills that may score well into a ten-year window. Though in the short term they appear to drive growth, they may, in the long term, impede business and dampen the economy.
Congressional Member Offices Visited in August

Barbara Angus – House Ways and Means Committee
Aruna Kalyanam and Alan Lee, House Ways and Means Committee (Minority)
Rep. Kenny Marchant (R-TX-24)
Rep. George Holding (R-NC-13)
Rep. Jason Smith (R-MO-8)
Rep. Peter Roskam (R-IL-6)
Senator Chuck Schumer (D-NY)
Rep. Pat Tiberi (R-OH-12)
Rep. Jim Renacci (R-OH-16)
Rep. Pat Meehan (R-PA-7)
Senator Bob Menendez (D-NJ)
Rep. Tom Reed (R-NY-23)
Rep. Adrian Smith (R-NE-3)

While congressmen and women are out campaigning, congressional staff continue to work in the area of tax reform.  As part of Accruit’s continued advocacy efforts on behalf of our real estate and personal property LKE clients and as co-chair of the Senate Finance Committee, both of which determine U.S. tax policy.
House Ways & Means Draft Blueprint for Tax Reform
Earlier this year, House Ways & Means Chairman Kevin Brady, (R-TX) introduced the draft blueprint for comments and, learning from the experiences of past Chairman Dave Camp, is soliciting input on the blueprint from members of Congress, the business community, and other interested groups prior to voting out of committee.   I’d like to highlight several points in the draft House Blueprint that could impact your business:
100% Immediate Expensing
Accelerating write-offs of capital assets is not a new expansion method and is still very popular.  The idea dates back to the 1980s, and more recently we have seen bonus depreciation as a widely accepted form of this.  But there are areas that the blueprint does not yet specify. 
Eligibility for new and used assets: Though the House Ways & Means Committee is currently silent, comments from senior staff indicate a preference to include all assets, new and used, except land..  Excluding land may cause complications when allocating cost between land and buildings. Also, excluding land could prove problematic when it comes to maintaining a reasonable debt-to-equity ratio when funding projects up front. There are also indications of further exclusions for certain classes of assets, but details are still unavailable.
No interest deductibility:  100% immediate expensing is costly, so the funds for the blueprint would come partially come from eliminating interest deductions on debt.  For our clients whose business model requires a higher debt-to-equity ratio, such a measure would make supporting growth initiatives or even maintaining current operations difficult. 
Potential elimination of 1031 like-kind exchanges:  Ways & Means senior staff indicated that while the elimination of like-kind exchanges is not currently drafted, it is still up for consideration as offset to cover the plan. During our meetings, we made very strong points as to why 1031 like-kind exchanges need to remain intact, should this bill move forward.

Not all companies would choose 100% expensing.  Depending on a company’s tax situations, immediate write-offs for tax purposes may not provide the flexibility needed to achieve company goals.  
Not all states may recognize 100% expensing for state tax purposes.  Like-kind exchanges must be the vehicle to defer gain recognition at the state level.
Not all assets may fall into 100% expensing categories.  Absent 1031s, per the independent studies regarding repeal of 1031s, a contraction may occur in GDP due to the lock-in effect if assets’ sales trigger gains and there is no means of deferral.
If land is not eligible for immediate expensing, then 1031s must remain the vehicle to defer gain recognition and encourage subsequent investment.

Senator Wyden’s Pooling Proposal
The pooling proposal from minority leader of the Senate Finance Committee, Senator Ron Wyden (D-OR), is another draft proposal worthy of continual monitoring. Election pundits suggest we may see a flip in the Senate from Republican to Democrat, placing Senator Wyden as chairman of the committee. 
There are some new ideas for U.S. tax code in Wyden’s draft, the basis of which has its roots in Canadian tax policy.  Wyden’s plan attempts to simplify depreciation calculations by pooling like assets in large groups (though FEA coalition members indicate the need to continue track assets on an individual basis negating most, if not all, of the simplification message).   
Unlike past Senate proposals, Wyden does not eliminate 1031s.  In fact, he continues to be a big supporter of the ability to defer gain recognition to encourage reinvestment.  As we continue our dialog with committee members, applauding the retention of 1031s, we want to better understand how a new pooling regime provides the much-touted simplification while protecting the integrity and spirit of 1031 exchanges.     
Avoid Unintended Consequences
Accruit continues to invest in advocacy efforts, hoping to connect the dots when tax reform bills are introduced so that you, our clients, will be informed on the details and not rely solely on the headlines.  While in DC we constantly state our goal of avoiding unintended consequences.  Members of Congress who introduce ideas that not only disrupt your business, but ours as well, need to understand the real implication of bills that may score well into a ten-year window. Though in the short term they appear to drive growth, they may, in the long term, impede business and dampen the economy.
Congressional Member Offices Visited in August

Barbara Angus – House Ways and Means Committee
Aruna Kalyanam and Alan Lee, House Ways and Means Committee (Minority)
Rep. Kenny Marchant (R-TX-24)
Rep. George Holding (R-NC-13)
Rep. Jason Smith (R-MO-8)
Rep. Peter Roskam (R-IL-6)
Senator Chuck Schumer (D-NY)
Rep. Pat Tiberi (R-OH-12)
Rep. Jim Renacci (R-OH-16)
Rep. Pat Meehan (R-PA-7)
Senator Bob Menendez (D-NJ)
Rep. Tom Reed (R-NY-23)
Rep. Adrian Smith (R-NE-3)

While congressmen and women are out campaigning, congressional staff continue to work in the area of tax reform.  As part of Accruit’s continued advocacy efforts on behalf of our real estate and personal property LKE clients and as co-chair of the Senate Finance Committee, both of which determine U.S. tax policy.
House Ways & Means Draft Blueprint for Tax Reform
Earlier this year, House Ways & Means Chairman Kevin Brady, (R-TX) introduced the draft blueprint for comments and, learning from the experiences of past Chairman Dave Camp, is soliciting input on the blueprint from members of Congress, the business community, and other interested groups prior to voting out of committee.   I’d like to highlight several points in the draft House Blueprint that could impact your business:
100% Immediate Expensing
Accelerating write-offs of capital assets is not a new expansion method and is still very popular.  The idea dates back to the 1980s, and more recently we have seen bonus depreciation as a widely accepted form of this.  But there are areas that the blueprint does not yet specify. 
Eligibility for new and used assets: Though the House Ways & Means Committee is currently silent, comments from senior staff indicate a preference to include all assets, new and used, except land..  Excluding land may cause complications when allocating cost between land and buildings. Also, excluding land could prove problematic when it comes to maintaining a reasonable debt-to-equity ratio when funding projects up front. There are also indications of further exclusions for certain classes of assets, but details are still unavailable.
No interest deductibility:  100% immediate expensing is costly, so the funds for the blueprint would come partially come from eliminating interest deductions on debt.  For our clients whose business model requires a higher debt-to-equity ratio, such a measure would make supporting growth initiatives or even maintaining current operations difficult. 
Potential elimination of 1031 like-kind exchanges:  Ways & Means senior staff indicated that while the elimination of like-kind exchanges is not currently drafted, it is still up for consideration as offset to cover the plan. During our meetings, we made very strong points as to why 1031 like-kind exchanges need to remain intact, should this bill move forward.

Not all companies would choose 100% expensing.  Depending on a company’s tax situations, immediate write-offs for tax purposes may not provide the flexibility needed to achieve company goals.  
Not all states may recognize 100% expensing for state tax purposes.  Like-kind exchanges must be the vehicle to defer gain recognition at the state level.
Not all assets may fall into 100% expensing categories.  Absent 1031s, per the independent studies regarding repeal of 1031s, a contraction may occur in GDP due to the lock-in effect if assets’ sales trigger gains and there is no means of deferral.
If land is not eligible for immediate expensing, then 1031s must remain the vehicle to defer gain recognition and encourage subsequent investment.

Senator Wyden’s Pooling Proposal
The pooling proposal from minority leader of the Senate Finance Committee, Senator Ron Wyden (D-OR), is another draft proposal worthy of continual monitoring. Election pundits suggest we may see a flip in the Senate from Republican to Democrat, placing Senator Wyden as chairman of the committee. 
There are some new ideas for U.S. tax code in Wyden’s draft, the basis of which has its roots in Canadian tax policy.  Wyden’s plan attempts to simplify depreciation calculations by pooling like assets in large groups (though FEA coalition members indicate the need to continue track assets on an individual basis negating most, if not all, of the simplification message).   
Unlike past Senate proposals, Wyden does not eliminate 1031s.  In fact, he continues to be a big supporter of the ability to defer gain recognition to encourage reinvestment.  As we continue our dialog with committee members, applauding the retention of 1031s, we want to better understand how a new pooling regime provides the much-touted simplification while protecting the integrity and spirit of 1031 exchanges.     
Avoid Unintended Consequences
Accruit continues to invest in advocacy efforts, hoping to connect the dots when tax reform bills are introduced so that you, our clients, will be informed on the details and not rely solely on the headlines.  While in DC we constantly state our goal of avoiding unintended consequences.  Members of Congress who introduce ideas that not only disrupt your business, but ours as well, need to understand the real implication of bills that may score well into a ten-year window. Though in the short term they appear to drive growth, they may, in the long term, impede business and dampen the economy.
Congressional Member Offices Visited in August

Barbara Angus – House Ways and Means Committee
Aruna Kalyanam and Alan Lee, House Ways and Means Committee (Minority)
Rep. Kenny Marchant (R-TX-24)
Rep. George Holding (R-NC-13)
Rep. Jason Smith (R-MO-8)
Rep. Peter Roskam (R-IL-6)
Senator Chuck Schumer (D-NY)
Rep. Pat Tiberi (R-OH-12)
Rep. Jim Renacci (R-OH-16)
Rep. Pat Meehan (R-PA-7)
Senator Bob Menendez (D-NJ)
Rep. Tom Reed (R-NY-23)
Rep. Adrian Smith (R-NE-3)

In June, two members of the House Agriculture Committee, Representative Bob Gibbs (R-OH) and Representative David Rouzer (R-NC), and 17 other congressmen and congresswomen wrote a letter to House Ways and Means Committee Chairman Kevin Brady (R-TX) urging the committee to help preserve 1031 like-kind exchanges. The letter, attached below, called Section 1031 “integral to [its] operations and ongoing vitality.”

“The provision serves as an important tool for providing flexibility and increased economic efficiencies for the agricultural community. Section 1031 permits a taxpayer to exchange business-use or investment assets for other like-kind business-use or investment assets, without recognizing taxable gain on the sale of the old assets. These taxes, that would otherwise be due if the transaction was structured as a sale, are deferred. The repeal of this fundamental provision would have a monumental negative impact on the industry as a whole.”

In the photo above, Federation of Exchange Accommodators Government Affairs co-chair and Accruit CEO Brent Abrahm discusses the letter with Representative Brady at a legislative event with the Associated Equipment Distributors trade association. Read more about these recent efforts on behalf of Section 1031 in yesterday’s article on the Americans for Tax Reform website,