1031 Like-Kind Exchanges are a valuable asset for businesses’ growth and success. However, many companies seeking tax relief don’t know that there are no licensing requirements for Qualified Intermediaries. The only stipulation set forth states that a QI cannot be related to or have a financial relationship with the taxpayer.
In 2008, a 1031 Exchange and Qualified Intermediary service provider filed for bankruptcy, which froze customers’ exchange funds in illiquid securities. Customers were forced to seek their funds in bankruptcy court where many ended up missing their specified exchange period and facing tax liabilities due to the failed exchange.