Structuring 1031 Like-Kind Exchanges: New Final IRS Regulations Regarding "Real Property"

This CLE course will examine the impact of tax reform on like-kind exchanges under IRC Section 1031 with a particular focus on what now qualifies as "real property" under new regulations recently released by the IRS. The panel will discuss the requirements for like-kind exchanges to qualify for tax-deferred treatment and provide best practices for structuring transactions to avoid adverse tax consequences after closing.

Failure to observe the Section 1031 rules will cause a like-kind exchange to become a taxable event. Advisers must correctly structure Section 1031 exchanges or risk unraveling exchanges, amending tax returns, or exposing clients to unexpected tax obligations.

From defining the exchange facilitator's role in complex structures such as forward or reverse exchanges to navigating related-party rules, various techniques and structures help ensure compliance with Section 1031 and tax-free treatment for the transaction.

The Tax Cuts and Jobs Act limited the application of 1031 to exchanges of real property, with the effect that certain assets were no longer eligible for 1031 treatment. In December 2020, the IRS issued final regulations that provide clarity regarding assets such as oil and gas pipelines, inherently permanent structures, and tangible assets connected with real property, as well as interests in or contract rights relating to real property.

Listen as our expert panel reviews and offers their insights into Section 1031 developments and the latest planning techniques. The panel will provide attendees with best practices for documenting a Section 1031 exchange and avoiding unwanted tax consequences.