1031 Like-Kind Exchanges of Personal Property Assets
In the past, to achieve a tax deferred purchase and sale of personal property assets, the relinquished and replacement property transfers had to take place simultaneously and the seller had to receive the replacement property from the buyer. Obviously, these restrictions made tax deferred exchanges difficult to consummate.
As a result of regulations, a properly structured exchange allows the exchanger (seller) 45 days to identify potential replacement property, and 180 days (or less, based upon the due date for filing taxes) to actually acquire replacement property. The exchanger can now transfer relinquished property to a buyer while receiving replacement property from a different seller. These regulations allow an exchange to be non-simultaneous and remove the necessity of receiving replacement property from the original buyer. The low cost and relative ease of doing an exchange have made tax deferred exchanges an increasingly popular vehicle for tax savings. The law requires that the properties be held in connection with an investment or used in a business or trade. The properties must be of "like kind," but not necessarily "same kind."
During the time between the transfer of the relinquished property and the acquisition of the replacement property, in order to preserve the character of the transaction as an exchange rather than a sale and purchase, it is necessary that the proceeds derived from the transfer of the relinquished property be held in a manner outside the direct or indirect control of the exchanger. In addition, the structure of a typical exchange requires an entity to act as a "qualified intermediary" to facilitate the exchange.
Accruit's Online Like-Kind Exchange Process for Personal Property Assets
Accruit offers the only patented LKE process that interacts directly and immediately with the parties to the exchange. Benefits of our secure online platform include:
- Exchange records and cash activities are stored securely and online for easy reference anytime a client or their tax advisors need them. If hard copies are needed, our reports are flexible and easy to print.
- Clients have information about their exchange and cash proceeds 24 hours a day, 7 days a week. This automated “audit trail” is a lasting record of an exchange done right and it’s available to clients, or their tax advisors whenever they need it. There’s simply no need to wait on the Qualified Intermediary to find or prepare records that are readily available to our clients.
- From day one, clients have a dedicated Client Service Manager who is intimately familiar with their transaction and Accruit’s online process. The Client Service Manager develops the closest relationship with the client, but involves Accruit’s “in-house” CPA and attorney when the need arises.
- Accruit’s automated system eliminates the potential for many human error issues.
- Our clients benefit from automatic, system generated emails that notify them regarding exchange deadlines, deliver required like-kind exchange notifications and detail their fund activity.
- Funds are held for our customers in segregated accounts and funds are never comingled.