A second joint letter from the like-kind exchange coalition, dated Apr. 20 requests clarification about IRS Notice 2020-23 and whether Affected (“Exchangor" or "Exchanger") Individual or entity desiring an exchange. Taxpayer s may use postponement provisions of Section 17 in Rev. Proc. 2018-58.
Section 17.02 provides in pertinent parts as follows:
(1) The last day of a 45-day identification period and the last day of a 180-day exchange period that fall on or after the date of a federally declared disaster are postponed by 120 days or to the last day of the general disaster extension period authorized by an IRS News Release or other guidance announcing tax relief for victims of the specific federally declared disaster, whichever is later. However, in no event may a postponement period extend beyond: (a) the due date (including extensions) of the taxpayer’s tax return for the year of the transfer (See §1.1031(k)-1(b)(2)(ii); or (b) one year (See section 7508A(a)).
The letter also requests that March 13, 2020 be deemed to be the beginning date of disaster relief for 1031 exchanges and that each day of the disaster period from March 13 to July 15 be treated as the date of the federally declared disaster.
Further, the FEA asked that if the end of the 45-day identification period or the end of the 180-day exchange period falls within the disaster period, that the deadlines to complete both of those actions be extended by 120 days or to July 15, 2020, whichever is later.
Lastly, we will need to wait and see whether we receive any opinion on if the extension provisions are mandatory or permissive. The language in IRS 2020-23 automatically extends the 45 & 180 day periods until July 15. We hope to obtain some clarity from the IRS about whether the taxpayer can elect to take the extension or conclude the exchange on such earlier date that the exchanger would have otherwise been able to.
We will continue to keep up-to-date on all new information or documentation received in response to the joint letter dated April 20. If you have questions about your exchange transactions, please contact your exhange manager or call us at 800-237-1031.