Also, for many decades, $1031(a)(2) expressly excluded an exchange of or for "stocks, bonds or notes, other securities or evidence of indebtedness or interest and interests in a partnership. With the 2017 changes, this subsection was deleted as originally written since all of these things are personal property. But the rule still applies. You cannot exchange real property for any of these things. However, many real estate investors often grow weary of being a landlord and would like to get out of the landlord business but still want to be able to use this $1031 like-kind exchange statute to defer gain on the sale of their real property. Over the years, one of the vehicles that has developed is an ownership in real property called a tenancy in common or a TIC. With a TIC, the owner actually owns a fractional interest in the real property (sometimes a fairly small fractional interest). And, as a tenant in common with all of the other tenants in common, they all have equal control over their own fractional interests. As a general rule then, ALL of the tenants in common have to all join together to do anything-sign a lease, receive money, virtually everything. As one might expect, this can be a cumbersome arrangement and tends to put the TIC owner right back into the role of being heavily involved in the management of the building. So the goal is to try to shift as much of this management role over to a centralized agent who will handle all of the management of the real property. If the TIC interest truly qualifies as an interest in real property, it can qualify for $1031 treatment. But, as you can imagine, as more and more of the management functions of the underlying real property are centralized into some kind of management structure, it begins to look more and more like a partnership interest (which, even prior to 2018, was NOT a like kind). So here's the facts. Jake owns 100% of an office building. The day-to-day management of this office building is wearing Jake out completely. He wants to sell the building. However, since he has a large amount of unrealized built in gain (the fair market value of the building is far in excess of Jake's adjusted basis), he hopes to do this in a manner that qualifies for $1031 deferral treatment. Jake as called you up to try to obtain inputs from you about what alternatives might exist. At a recent seminar, Jake heard a speaker mention the idea of a TIC"as a possible tool. He thinks this may be exactly what he wants to do because someone else (a management company) will handle all of the day-to-day management of the replacement property in which he wants to purchase a TIC interest. Before you meet with Jake, however, you want to learn more about what the IRS will tolerate. Assignment: Using Checkpoint Edge, look for any kind of administrative guidance that might address this question. All you need to do is find the specific citation and give it to me. Hint: This has been around for quite some time (from the early 2000's so this is NOT a new concept. Also, for many decades, $1031(a)(2) expressly excluded an exchange of or for "stocks, bonds or notes, other securities or evidence of indebtedness or interest and interests in a partnership. With the 2017 changes, this subsection was deleted as originally written since all of these things are personal property. But the rule still applies. You cannot exchange real property for any of these things. However, many real estate investors often grow weary of being a landlord and would like to get out of the landlord business but still want to be able to use this $1031 like-kind exchange statute to defer gain on the sale of their real property. Over the years, one of the vehicles that has developed is an ownership in real property called a tenancy in common or a TIC. With a TIC, the owner actually owns a fractional interest in the real property (sometimes a fairly small fractional interest). And, as a tenant in common with all of the other tenants in common, they all have equal control over their own fractional interests. As a general rule then, ALL of the tenants in common have to all join together to do anything-sign a lease, receive money, virtually everything. As one might expect, this can be a cumbersome arrangement and tends to put the TIC owner right back into the role of being heavily involved in the management of the building. So the goal is to try to shift as much of this management role over to a centralized agent who will handle all of the management of the real property. If the TIC interest truly qualifies as an interest in real property, it can qualify for $1031 treatment. But, as you can imagine, as more and more of the management functions of the underlying real property are centralized into some kind of management structure, it begins to look more and more like a partnership interest (which, even prior to 2018, was NOT a like kind). So here's the facts. Jake owns 100% of an office building. The day-to-day management of this office building is wearing Jake out completely. He wants to sell the building. However, since he has a large amount of unrealized built in gain (the fair market value of the building is far in excess of Jake's adjusted basis), he hopes to do this in a manner that qualifies for $1031 deferral treatment. Jake as called you up to try to obtain inputs from you about what alternatives might exist. At a recent seminar, Jake heard a speaker mention the idea of a TIC"as a possible tool. He thinks this may be exactly what he wants to do because someone else (a management company) will handle all of the day-to-day management of the replacement property in which he wants to purchase a TIC interest. Before you meet with Jake, however, you want to learn more about what the IRS will tolerate. Assignment: Using Checkpoint Edge, look for any kind of administrative guidance that might address this question. All you need to do is find the specific citation and give it to me. Hint: This has been around for quite some time (from the early 2000's so this is NOT a new concept