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Revenue Procedure 2010-14: IRS rules that 1031 exchange parties not in actual or constructive receipt of proceeds due to QI default

The IRS issued Revenue Procedure 2010-14, providing a much-needed safe harbor for reporting gain or loss for some taxpayers.

The Internal Revenue Service today issued Revenue Procedure 2010-14, providing a much-needed safe harbor for reporting gain or loss for some taxpayers. Affected parties are taxpayers who initiated 1031 like-kind exchanges (LKEs) but failed to complete the exchanges because the qualified intermediary (QI) defaulted on their obligation to acquire and transfer replacement property to the taxpayer. The IRS ruling says that if the taxpayer meets the requirements of the revenue procedure, it will not be treated as being in actual or constructive receipt of exchange proceeds due to a QI default (becoming subject to a bankruptcy or receivership proceeding). A PDF of the full IRS ruling can be downloaded here: Revenue Procedure 2010-14.

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