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Rex sells (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 sells (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 empty sections of the chart below:

FMV Old

900,000

900,000

900,000

900,000

Liability Old

-0-

-0-

-0-

<100,000>

Basis Old

500,000

100,000

100,000

400,000

FMV New

900,000

700,000

1,200,000

1,000,000

Liability New

-0-

-0-

-0-

<300,000>

Cash

-0-

<300,000>

Cash Received

-0-

200,000

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 Zeller Bach did in the Starker exchange.

How does a qualified intermediary solve this problem?

What are the two time periods required to complete an exchange?

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