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1031 like-kind exchange

Phil L
Level 2

my client is partner in an S-corp that is a real estate investment company with one warehouse building that was rented out.

in June 2021 the warehouse was sold and the company was dissolved. my client received $400,000 for his share of partnership. 

The client wants to buy real estate and use the $400,000 for like-kind 1031 exchange.

Question: -   any notice to IRS regarding the intend to use the 1031 exchange

                -    can the $400,000 be used towards more than one property 

                -    is the two year time limit for 1031 exchange still in effect.

Thank you.

Phil L


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2 Replies 2
Level 12

Oops, your client needs help. If he received the cash, there can be no 1031.

If it was an S corporation, then he was a shareholder, not a partner in a partnership. 

FYI, in a valid 1031, the new property needs to be identified within 45 days of the sale of the old property, and the purchase closed in 180 days.

No notice to the IRS is needed, just a proper filing of tax returns. 

Yes, more than one property is allowed. 

What 2 year time limit?

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Level 15

You cannot do an exchange on something you never owned. The S Corp was the property owner. Not the shareholder.

Just another reason that S Corp entity should never hold real property.

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