Question
Rex sell (relinquished) property and completes a like-kind exchange by purchasing replacement property. The relinquished property is referred to as the Old property and the
Rex sell (relinquished) property and completes a like-kind exchange by purchasing replacement property. The relinquished property is referred to as the Old property and the replacement as the New property. You may assume that all elements of Section 1031 have been satisfied. Complete the last two rows of each column 12 points
| FMV Old | 600,000 | 600,000 | 600,000 | 600,000 |
| Liability Old | -0- | -0- | -0- | <100,000> |
| Basis Old | 100,000 | 100,000 | 100,000 | 100,000 |
| FMV New | 600,000 | 700,000 | 500,000 | 700,000 |
| Liability New | -0- | -0- | -0- | <300,000> |
| Cash | -0- | <100,000> | -0- | -0- |
| Cash Received | -0- | -0- | 100,000 | 100,000 |
| Gain Realized | ||||
| Gain Recognized | ||||
| Basis New |
The above example is what is typically found in a secondary source explaining 1031 exchanges. Exchanges are almost never two-party exchanges. When someone sells relinquished property and wants to do an exchange, the buyer will not cooperate like Crown Zellerbach did in the Starker exchange.
a. How does a qualified intermediary solve this problem?
b. What are the two time periods required to complete an exchange? 4
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