The good news is that IRS has issued 1031 Exchange Timeline Extensions on some 1031 deadlines. But the notice (Notice 2020 – 23) was not written like the past Disaster Relief Notices, so there may be more clarification to come.
Last week I informed you of the work done by the Federation of Exchange Accommodators (FEA – our trade organization for 1031 Exchanges) to form a coalition of other industries, which jointly asked for a Presidential Disaster Relief Order, for time extensions on Section 1031 exchanges. Our letter to the Treasury was delivered on March 23, 2020.
Late yesterday (4/9/2020) Liberty 1031 received a confirmation that the Internal Revenue Service issued a Notice extending a number of deadlines including for 1031 Exchanges.
So, what 1031 Exchange timeline extensions did we receive? Any 45-day or 180-day time deadline that occurs between April 1, 2020, and July 15, 2020, is extended to July 15, 2020.
I will give some examples in a moment.
The normal timeline extension we expect with disaster relief notices is 120 days. However, the interpretation of the IRS Notice given last evening is that there is no 120-day extension—only extensions until July 15, 2020.
I sit on the Board of Directors of the FEA, and we are at the forefront of trying to get some of the dates changed and hopefully getting the 120-day extension put back in, as has been the case in the past. But as a friend of mine, after reviewing the new Notice says: “This activity is a work in progress.” At least we have extensions until July 15, 2020.
As promised here are some examples:
Example #1: Taxpayer’s/Exchanger’s 45th day for identification is on April 24, 2020. The Taxpayer/Exchanger now has until July 15, 2020, to identify a replacement property. The 180th day for the last day to close for safe harbor purposes on a replacement property remains the same. In this example, that would be September 6, 2020.
Example #2: Taxpayer’s/Exchanger’s 180th day for closing on Replacement Property purposes is on June 25th. The Taxpayer/Exchanger now has until July 15, 2020, to close on the Replacement Property and still qualify for a valid exchange.
As always, I will keep you posted as we learn further clarification of Notice 2020-23 or receive additional Notices related to 1031 Exchange Timeline Extensions.
Liberty 1031’s staff are working remotely. Everyone has access to email, work phones, files, and information. Liberty 1031’s business continuity plan is in place; we are 100% operational and business will continue without disruption.
As a reminder, the headquarters office hours remain the same from 9:00 am to 5:00 pm EDT and the main telephone number is 866-903-1031 (toll-free).
We look forward to continuing to work with you on future Section 1031 exchanges.