March 31, 2009: Related Party Exchange. Taxpayer’s exchange with a related party is disallowed because Taxpayer failed to prove the absence of tax avoidance as a principal purpose of the exchange. Ocmulgee Fields, Inc. v. Commissioner, 132 TC 6

February 27, 2009: Partnership Interest. Entity is not disqualified from acting as an EAT (exchange accommodation titleholder) by its acquisition and transfer to Taxpayer as replacement property of an interest in a partnership in which the Taxpayer already owns the balance of the partnership interests. Ltr. Rul. 2009-09008

February 20, 2009: Qualified Intermediary. The transfer of ownership of a qualified intermediary resulting in a change of its tax status from an S corporation to a C corporation will not cause the QI to be treated as a new or different QI with respect to its pending exchanges and, therefore, will not imperil those exchanges. Ltr. Rul. 2009-08005

July 30, 2008: Conversion of Investment Property to a Personal Residence. IRC §121 is amended to require a Taxpayer who converts investment property to a personal residence to prorate the exclusion otherwise available (i.e. $250,000 for an unmarried person, $500,000 for a married couple) based upon the relative time the property was utilized for each purpose. In making this determination, non-qualifying use prior to 2009 is disregarded. The Housing Assistance Tax Act of 2008

July 10, 2008: Taxation of interest on funds held by QI. Final regulations are issued providing that exchange funds held by QI are treated as having been loaned by the Taxpayer unless the exchange agreement specifies that earnings on those funds are payable to the Taxpayer. T.D. 9413

May 12, 2008: Combined Reverse and Forward Exchange. The IRS approves an exchange structuring in which the Taxpayer uses the same relinquished property for both a reverse exchange and a forward exchange, even though this effectively extends to 360 days the period between the day on which the replacement property is parked in the reverse exchange and the day on which the forward exchange is completed. CCA 200836024

February 15, 2008: Vacation Home Exchange. The IRS issues a revenue procedure providing a safe harbor for exchanges of vacation homes. Rev. Proc. 2008-16 (For further information, see my article, The New Safe Harbor for Vacation Home Exchanges)

February 15, 2008: Partnership Interests and Disregarded Entity. Taxpayer's receipt of 100 percent of the interests of the partners in a partnership that holds real property, by a disregarded entity created by Taxpayer to receive the real property, will be treated as the receipt of property that is like kind to the real property disposed of by Taxpayer. Ltr. Rul. 2008-07005

November 2007: Exchange of TIC Interests. The Franchise Tax Board gives notice that, in reviewing exchanges of purported undivided interests, it will look to "substance over form" in determining whether an interest in real property qualifies as a true tenancy in common interest or actually constitutes a disguised partnership interest. In the FTB’s view, compliance with Rev. Proc. 2002-22 is a minimum requirement for establishing a true tenancy in common. Notice 2007 1007 02

May 30, 2007: Vacation Home Exchange. Tax Court denies exchange treatment where both the relinquished property and the replacement property were vacation homes which the Taxpayers used exclusively for their personal use, never attempted to rent to third parties and treated as personal residences on the tax returns. Moore v. Commissioner, T.C. Memo. 2007-134. (For further information, see my article, Can a Vacation Home be Exchanged under IRC Section 1031?)

March 23, 2007: Related Party Exchange. The IRS approves series of transactions in which Taxpayer transfers the relinquished property to a related party in exchange for replacement property which the related party has acquired from an unrelated third party. Furthermore, Taxpayer will recognize no gain upon the related party’s sale of the relinquished property within two years of the exchange. Ltr. Rul. 2007-12013

February 9, 2007: Related Party Exchange. Exchange by Taxpayer with a family trust and with her siblings of Taxpayer’s undivided 25% interest in Parcel # 1 for a 100% interest in Parcel # 3 will constitute a like-kind exchange. In addition, the trust's subsequent sale of its interest in Parcel # 1 is not a disposition that causes recognition of any gain to Taxpayer, pursuant to 1031(f), because the avoidance of Federal income tax was not one of the principal purposes of the exchange or subsequent disposition of Parcel # 1. Ltr. Rul. 2007-06001

September 30, 2006: Requirement that Relinquished Property be Held for a Proper Purpose. A limited liability company (the "LLC") received certain parcels of real property in the liquidating distribution of a trust. Although the trust entered into binding sales agreements prior to distributing those properties to the LLC, the IRS approves the LLC’s proposed exchange of those properties. Ltr. Rul. 2006-51030

March 1, 2006: Exchange of Undivided Fractional Interests. The IRS approves the structuring of a syndicated offering of undivided fractional interests (i.e. tenancy in common interests), holding that it complies with the requirements of Rev. Proc. 2002-22. Ltr. Rul. 2006-625009

December 22, 2005: Related Party Exchange. Trust owns Property 1, related party S Corporation owns Property 2, an unrelated Seller owns Property 3 and an unrelated Buyer wishes to purchase Property 1. Utilizing a QI, Trust wishes to exchange Property 1 for Property 3 and S Corporation wishes to exchange Property 1 for Property 2. The IRS approves both of these exchanges even though they are between related parties provided that Trust does not dispose of Property 3 within two years of acquiring it and that S Corporation does not dispose of Property 2 within two years of acquiring that property. Ltr. Rul. 2006-16005

February 24, 2005: Exchange by Taxpayer Shortly Before it is Dissolved. A testamentary trust may hold replacement received in an exchange "for productive use in a trade or business or for investment" even though the trust soon will terminate and will distribute its properties. Ltr. Rul. 2005-21002

January 27, 2005: Exchange of Property used in Part for Business and in Part as a Residence. The IRS provides guidance for combining (and getting the benefits of) IRC sections 121 and 1031 in the transfer of a single piece of property. Rev. Proc. 2005-14

December 6, 2004: Exchange of Undivided Fractional Interests. IRS approves the structuring of a syndicated offering of undivided fractional interests (i.e. tenancy in common interests), holding that it complies with the requirements of Rev. Proc. 2002-22 (see below). Ltr. Rul. 2005-13010

October 22, 2004: Conversion of Replacement Property to Personal Residence. IRC section 121, which permits a Taxpayer to exclude up to $250,000 of gain on the sale of a principal residence ($500,000 for married Taxpayers) if the Taxpayer has resided in the property for two of the preceding five years, is amended to require a Taxpayer to own the property for five years if it originally was acquired as a replacement property in a tax-deferred exchange. IRC §121(d) (10)

August 16, 2004: Exchange of Undivided Fractional Interests. Because lenders frequently are reluctant to make loans to or permit assumptions by groups of tenancy in common investors, many promoters of TIC investments have hoped that use of a Delaware Statutory Trust ("DST") would resolve the problem of obtaining or assuming financing. The IRS now has ruled that an interest in a DST constitutes like kind property for purposes of IRC §1031. However, the ruling expressly states that the trustee’s powers must be limited in a number of ways that are likely to limit the appeal of this vehicle. Rev. Rul. 2004-86

May 22, 2003: Exchange Straddling Two Tax Years. A Taxpayer is treated as having been relieved of liabilities in the first year of an exchange which straddles two tax years. Rev. Rul. 2003-56

April 7, 2003: Related Party Exchange. The IRS approves an exchange in which an exchange accommodation titleholder will acquire from a party related to the Taxpayer a long term leasehold interest in real property even though improvements will be constructed while title is held by the exchange accommodation titleholder. Ltr. Rul. 2003-29021. (For further information, see my article, Construction Exchanges: A Tale of Two Letter Rulings.)

September 11, 2002: Construction Exchange. The IRS approves an exchange in which an exchange accommodation titleholder will acquire from a party related to the Taxpayer a long term leasehold interest in real property even though improvements will be constructed while title is held by the exchange accommodation titleholder. Ltr. Rul. 2002-51008. (For further information, see my article, Construction Exchanges: A Tale of Two Letter Rulings.)

April 1, 2002: Exchange of Property Previously Used as Personal Residence. The IRS stipulates that a valid exchange occurred notwithstanding the fact that the Taxpayer had converted the relinquished property from being a personal residence to being investment property only four months prior to its disposition. However, Taxpayer’s improper determination of its basis in the relinquished property results in a 20% negligence penalty! Bundren v. Commissioner (10th Cir 2002) 32 Fed App 527, aff’g. T.C. Memo 2001-2.

March 19, 2002: Exchange of Undivided Fractional Interests. The IRS details the requirements for obtaining an advance ruling as to the tax classification of undivided fractional interests (also known as tenancy-in-common interests.) Rev. Proc. 2002-22. (For further information, see my article, Exchanges of Undivided Interests in Real Property after Rev. Proc. 2002-22.)

September 3, 1999: Disguised Exchange of Partnership Interest. The IRS disqualifies a section 1031 exchange in which the Taxpayer was a partner with "A" in a partnership. The partnership was dissolved, certain real property was distributed to the Taxpayer and that property became the Taxpayer’s relinquished property in its intended exchange. "A" subsequently acquired that property. The exchange was disqualified because the transaction was really a sale of the Taxpayer’s partnership interest. Ltr. Rul. 1999-51004. (For further information, see my article, Exchanges Involving Partners and Partnerships - Reading the Tea Leaves.)