Powerpoint presentation for Edmund & Wheelers 4 HR. CE course for accountants.

3. Shhhhh.
Don’t tell anyone.
Your clients are eligible for
interest free loans from the US
and State Government…
…for as long as they’d like.
…for as many times as they’d
like.

4. Of the approximately
$200 Billion in commercial real
estate transactions during 2008, it is
estimated that 20-25% could have
benefited from Section 1031
treatment.
Only 3% did.

5. What’s In It For You?
• Absolutely Part of Your Fiduciary Responsibility
• Tax Ramifications on the Sale of Investment/Trade or Business Property
are Key
• Clients Will Appreciate Your Resourcefulness
• Section 1031 has wide applicability in your
accounting practice
• Help Your Clients strategize the sale and repurchase of their holdings.
• Property portfolios may be realigned tax free.
• Become Involved With Client’s Real Estate Strategy
• Strengthen & Expand Your Referral Base

6. Today We Will Explore…
• What Is Section 1031?
• Section 1031’s Misconceptions
• How To Recognize When to Use Section 1031?
• Who Qualifies For an Exchange?
• How to Report an Exchange
• What Qualifies For an Exchange?
• Real-life Examples of Our Exchanges
• Alternative Exchange Strategies

7. Primary Objectives of This Course
• Provide a Basic Section 1031 Education
• Provide Tools & Information Enabling You to
Better Serve Your Clients
• Assist You In Recognizing the Strategic
Applications of Section 1031 and to Explore
Alternative Replacement Strategies

8. Primary Objectives of This Course
• Help You to Understand How
Section 1031 Integrates Into
Your Client’s Overall Financial
Goals & Objectives
• We will Demonstrate our Ability
to Become Your Section 1031
Resource in the Future

9. What Is An Exchange?
• Method to sell Investment and/or Trade or Business Property
and replace it with New Property that doesn’t trigger any tax.
• Its essential elements are: The Client must:
– Give a Deed (or a Bill of Sale);
– Get a Deed (or a Bill of Sale); and
– Don’t handle Cash

10. The Five Critical Elements
1. Intent
2. Form and Documentation
3. Control of Funds
4. Like-Kind Properties
5. Time Limits

11. The Regulation - Section 1.1031(k)-1
“A deferred exchange is
defined as an exchange in
which, pursuant to an
agreement, the taxpayer
transfers property held for
productive use in a trade or
business or for investment
(the ‘relinquished property’)
and subsequently receives
QI property to be held either
for productive use in a trade
or business or for
investment (the
‘replacement property’).”

12. Section 1031(a)(1)
“No gain or loss shall be recognized on the
exchange of property held for productive use in trade or
business or for investment if such property is exchanged
solely for property of like kind which is held either for
productive use in a trade or business or for investment.”
Section 1031 Works ONLY with
Investment/Trade or Business Property
YOU MUST PROVE INTENT!

13. Exceptions to Section 1031 (Sec.1031(a)-(2))
• A. Stock in trade or other property held primarily
for sale
• B. Stocks, bonds or notes
• C. Other securities or evidences of indebtedness
or interest
• D. Interests in a partnership
• E. Certificates of trust or beneficial interest
• F. Choses in action (litigation rights)

14. What is Investment Purpose?
• Investment is the passive holding of property for more
than a temporary period with the expectation of
appreciation
• Real estate (even if unproductive) held by a non dealer for
future use or increment in value is held for investment and
not primarily for sale (Reg. 1.1031(a)-1(b))
• Thus property held for sale in the
immediate future is not held for
investment

15. What are the benefits of an Exchange?
• Full capital gains tax deferral (Exchange goes Even or Up)
• Relocation of investment
• Change in investment type
• Diversification of investment
• Planning of investment
• Solve problem of joint ownership
• Increase cash flow

16. Three Essential Elements:
• The properties must be exchanged (not sold)
• Both the “Relinquished Property” and the “Replacement
Property” must be held by the same taxpayer for
investment or productive use (“Identity of Taxpayer Rule”)
• The properties must be “Like-Kind” with one another
– Real property for real property
– Personal property for personal property
– Matching in value or the new property more expensive
– “Boot” results when the old property is more expensive

17. Replacement Property Rules @ Reg 1.1031(k)-1-(c)(4)
• The Three Property Rule - The Exchangor may identify up to
three (3) properties, without regard to value; or
• The 200% Rule - The Exchangor may identify more than three
properties, provided their combined fair market values does not
exceed 200% of the value of the Relinquished Property; or
• The 95% Rule - The Exchangor may identify any number of
properties, provided the Exchangor acquires 95% of those
properties (by value).
• Properties received before the 45th day do not have to be
identified, but must appear on one of the ID’s after Day 45.

18. Like-Kind Requirement:
• The term “like-kind” refers to the nature or character of the
property and not to its grade or quality (Reg 1.1031(a)-1(2)
(b))
• Real property cannot be exchanged for personal property
(Reg 1.1031(a)-1(2)(b))
• Qualifying personal property can be exchanged for
property of a similar character (NAICS (formerly SIC)
Codes must match; the Code must fall within Sector 31, 32
or 33 of NAICS; last digit cannot be a 9.) (Regs 1.1031(a)-2,
et seq.)

19. Examples of Like-kind
• Improved real property for Unimproved real property (Reg
1.1031(a)-1(2)(b))
• Lease for >30 years (Reg 1.1031(a)-1(2)(c))
• Partial interest for a whole interest
• One property for more than one
property and vice versa

20. Apartments
Single Family Dwelling
Like - Kind Condos
Land
Commercial Development

21. What is Like Kind?
ANY REAL PROPERTY IS LIKE KIND WITH ANY OTHER REAL
PROPERTY….
Single Family Dwelling
Apartment Building

22. What is Like Kind?
ANY REAL PROPERTY IS LIKE KIND WITH ANY OTHER REAL
PROPERTY….
Multi-family Dwelling
Single Family Dwelling

23. What is Like Kind?
ANY REAL PROPERTY IS LIKE KIND WITH ANY OTHER REAL
PROPERTY….
Land Development
Single Family Dwelling

24. What is Like Kind?
ANY REAL PROPERTY IS LIKE KIND WITH ANY OTHER REAL
PROPERTY….
Single Family Dwelling
Commercial Property

25. Personal Property (Regs 1.1031(a)-2, et seq.)
• Same General Asset Class or Product Code
• North American Industry Classification System
• Sector 31-33: Manufacturing
– Examples: Construction Equipment, Well Drilling Equipment, Logging
Equipment, Commercial Vessels, Commercial Laundry Equipment
– See www.census.gov/naics

26. Timing is everything!
• The Exchange Period begins on the transfer of the
Relinquished Property – This is Day #0
• Exchangor must identify qualified Replacement Property
within 45 days of closing (the “Identification Period”)
• Exchangor must acquire within 180 days, or due date of
the tax return (counting extensions) for the tax year of the
sale (the “Exchange Period”) (Reg 1.1031(k)-1(b), et seq.)
• There are no extensions unless a federal disaster is
declared in the vicinity of the taxpayer or the property.

27. Can Anyone Handle An Exchange?
• No! It must be a “Qualified Intermediary”(QI) as defined by
regulation: see Regs 1.1031(k)-1(k), et seq.
• Cannot Be the Exchangor or a Relative (Sec. 267(b) or Sec.
707(b)(1))
• Cannot be an Agent of the Taxpayer
§ One who has acted as employee, attorney, accountant, investment
banker, broker or real estate agent within the past 2 years
§ The QI Handles All Aspects of the Exchange and Should be
Involved EARLY in the Process

28. What does the QI do? Regs 1.1031(k)-
1(g)(4), et seq.
• Creates Exchange Agreement; signed by Taxpayer.
• Has Legal Standing as the substitute Seller of Relinquished
Property and substitute Buyer of Replacement Property
(Assignee Seller/Buyer).
• Notice of the Assignment required to be given to Buyer and
Seller, with Closing Instructions to both Settlement Agents.
• Banking, Safeguarding & Delivery of Exchange Funds
• Assurance of Critical Deadlines Including the 45 & 180 Day
Deadlines
• Final accounting for tax purposes

29. Who Qualifies for an Exchange?
Owners of investment property and business property may
qualify for a Section 1031 deferral. Individuals, C Corporations,
S corporations, partnerships (general or limited), limited liability
corporations, trusts and any other taxpaying entity may set up
an exchange of business or investment properties for business
or investment properties under Section 1031.
Ref - www.irs.gov

30. Does Your Situation Qualify?

31. The Five Most Common Section 1031
Misconceptions
1
All 1031 Exchanges must involve
swapping or trading with other
property owners......

32. The Five Most Common Section 1031
Misconceptions
2
It’s required that all types of 1031
exchanges must close
simultaneously......

33. The Five Most Common Section 1031
Misconceptions
3
"Like-kind" means purchasing the
same type of property which was
sold.......

34. The Five Most Common Section 1031
Misconceptions
4
1031 Exchanges must be limited to 1
exchange and 1 replacement
property.......

35. The Five Most Common Section 1031
Misconceptions
5 A Section 1031 is NOT a path to cash.

36. What about the States?
• All states but one (PA) allow a Section 1031 within
or outside the state; PA taxes even in-state 1031’s
• States follow the Federal rules closely.
• Some states w/ income taxes (e.g. CA, ME, NJ, NY,
RI, VT) require a Waiver of (state tax) Withholding
• Other states w/ income taxes (MA) don’t bother
• Land Gains Tax in VT: Old & New properties must
be in-state; New Property takes Old Holding Period
• Some states (ME, VT) have a formal Waiver; others
CA, HI, NJ, NY, RI, SC) permit a Seller Affidavit.

37. IRS Form 8824 – Reporting an
Exchange

38. 123 Main Street, City, State; 4 Family Rental
456 Main Street, City, State; Single Family Rental
1 2 1997 Property Information
6 1 2008 & Exchange Dates
7 16 2008
11 28 2008
Related Party? YES
Line 8, NO Line 12
Part II
Part III
Related Party - Sec. 267(b) or Sec. 707(b)(1)

39. Joe Related Taxpayer Brother XXX-XX-XXXX
Related Party
789 Main Street, City, State, Zip
Information
Must remain
NO for two
tax years
Related Party -
Sec. 267(b) or
Sec. 707(b)(1)
If 9 or 10 is YES, 11 C is most probable answer (attach statement)

40. Multi-asset
Exchanges
“Boot”
FMV
Old basis +
“New money”
Eg. A building
for vacant land

41. What is “Boot?
• If the Price + costs of the New
Property is less than the Price –
costs of the Old, Boot results. Boot Triggers
TAX…
• Boot can be avoided by
exchanging even or up
…The Exchange
• Boot is property of an Unlike Could Still Work!
Kind; Cash Boot is net cash;
Mortgage Boot is less net debt.

42. What is “New Money” (Basis Additions):
• The Taxpayer picks up new basis for all “New
Money” that is added to the transaction.
• “New money” = Net new cash + Net increase in debt
• “Strike Price” = Sales price – costs
• Taxpayer gets increased basis if the New property
+ acquisition costs = or exceeds the Strike Price

43. Exchanges that cross 2 tax years:
• Reported for the year of the sale of the Old
Property
• July 5 + 180 days (or Nov. 17 + 45 days) = Jan. 1st
• Election under Reg. 1.1031(k)-1(j) (Coordination of
Sec. 1031 & 453):
• Provided the Client had a bona-fide intention to
exchange at the start of the Exchange Period

44. Can a Failed Exchange be fixed?
• IRS Regulations allow a sale to be rescinded
within the same tax year if the parties are restored
to their original positions (Rev Rule 80-58)
– Un-close with the Buyer.
– Re-close with the Buyer properly, using a Q.I.

45. GEF Edits
Section 1031 Exchanges for Partnerships
• Exchange must be at the entity level; partnership interests (or those of
any entity) are not exchangeable per 1031(a)-2
• Nor does the “Drop & Swap” technique work either. If a partnership
asset is distributed to a partner, that person must establish a separate
“holding period” in the asset before the exchange (1 year minimum; 2
years better).
• IRS is now asking on Form 1065: “At any time during the tax year, did
the partnership distribute to any partner a tenancy-in-common or other
undivided interest in partnership property?” (Question #14)

46. GEF Edits
Partnerships (cont’d)
4. Nor does the “Swap & Drop” technique work either, where the
entire partnership does the exchange and then distributes some
or all of the property it receives to departing partners.
5. On Form 1065, IRS now asks the following question: “Check this
box if, during the current or prior tax year, the partnership
distributed any property received in a like-kind exchange or
contributed such property to another entity (including a
disregarded entity)” Question #13

47. GEF Edits
Partnerships: So what to do?
6. Identify the partners who want to depart; preserve the partnership at all
costs; must have at least 2 members.
7. Close on the asset, but reserve out enough “boot” to allocate to the
partners who want to leave; the rest of the sale is handled by the QI in
the usual way.
8. The departing partners get the cash and the allocated debt relief, and
pay tax on these funds per their basis in the partnership.
9. The remaining partners go forward and take in the like-kind Replacement
Property.
10. This preserves the partnership EIN #, and its holding period.

48. GEF Edits
• So what to do? (cont’d)
11. This leaves the answers to Questions #13 and #14 on Form
1065 “No.” The partnership would issue all of the partners
K-1 returns, however, in addition to the figures for the
normal partnership operations for the prior year, those that
took cash or distributed debt relief would have that fact and
the correct amounts stated on their K-1.

49. Break Time…

50. The Power of Section 1031
What happens when both participate in 3 typical real
estate transactions…
…with radically different approaches?

51. Hypothetical Example Assumptions
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52. First Transaction - Today
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53. Second Transaction – In 5 Years
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54. Third Transaction – In 10 Years
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55. Fourth Transaction – In 15 Years
$361,336 $507,000
$108,400 $152,100
($21,680) $ 0
$448,056 $659,100
$2,240 $3,296
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Commercial Real Estate Services

56. Summary of Wealth Building Benefits
4th Transaction $448,056 $659,100
Cumulative Increase 49.3% 119.7%
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57. Summary of Increased Cash Flow
At 15th Year
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58. The After-Tax Analysis (a sale in Year 15)
• Owner #1 (in Year 15)
– Has Property worth $448,056; all taxes have been paid
• Owner #2 (in Year 15)
– Has property worth $659,100, with $136,810 tax due
• Net Result (after tax):
– Owner #2 has $74,234 more wealth than Owner #1, and
has received $92,779 more income than Owner #1.
– But why would Owner #2 ever pay the tax when s/he
can exchange over & over, using THE POWER OF
SECTION 1031?

59. The Most Common Exchange Types
• Delayed Exchange (Regs 1.1031(k)-1, et seq.)
– The client sells his property, identifies Replacement Property options
within 45 days, then purchases the property(ies) within 180 days.
• Reverse Exchange (Rev. Proc 2000-16 & 2004-51)
– The client purchases (with a Single Purpose Entity) the Replacement
Property before his current property is sold. The client then has 180
days to close on his Relinquished Property.
• Build-to-Suit (Reg 1.1031(k)-1(e), et seq.)
– The client wishes to purchase and improve Replacement Property(ies)
with the proceeds from the sale of his Relinquished Property. This is
accomplished with a Single Purpose Entity, a/k/a an Exchange
Accommodation Titleholder (“EAT”).

60. Reverse Exchanges – Choice of Entity
• The EAT Can Be an Individual or an Entity
– Using an Individual is Very Dangerous (Liability/Bankruptcy/Death)
• For Protection the Entity Should be an LLC or C-Corp
LLC C-Corp
 Can Convey LLC Membership  Fiscal Tax Year
 No Tax Filing in
 Could Save Transfer Taxes (Not NH) Middle of Exchange
 Better Audit Trail

61. Reverse Exchanges – Transfer Taxes
• Most States (Including NH) Charge 2 Transfer Taxes:
• Property Conveyed to the EAT
• Property Conveyed out of the EAT
• ME and VT Offer a Waiver of The Second Tax
• Waiver MUST be Applied For BEFORE the Second Closing
• NH Collects Taxes on ALL Deeds With Few Exceptions

62. Case Studies
The case studies outlined
are presented as a
representation of the 5 most
common types of Section
1031 exchanges.
Please note that the case
studies have been simplified
and several essential steps
have been omitted for clarity.
Click on the case study you
would like to review.
www.section1031.com

63. Case Study 1
ABDC-Delayed Exchange (Existing Property)
Direct Format

64. CAMPGROUND FOR SEVERAL SINGLE FAMILY
RESIDENCES
One campground
exchanged for 16 new
properties…
…including 2 new
campgrounds.

66. 6 PROPERTIES FOR A DOZEN CONDOMINIUMS
Sold six properties to
aggregate funds to buy…
…over a dozen brand new
condo units.

68. CONVERTING INVESTMENT PROPERTY TO PERSONAL
RESIDENCE
Exchange for your dream
home, rent it for two
years…
…convert it to your primary
residence.
Note changes in Section
121 after 1/1/09 make the
non-primary residence time
periods taxable.

70. ACQUIRE A RENTAL PROPERTY FOR A FAMILY MEMBER
Exchange for a home for
the kids…
…charge Fair Market rent.
..After two (2) years, begin
gifting the property.
(Rev Proc 2008-16)

72. Case Study 2
ACBD-Delayed/Simultaneous Exchange (Existing Property)
Reverse Format - Exchange Last

73. BUYING A NEW PROPERTY BEFORE THE OLD PROPERTY SELLS
Taxpayer Negotiates the
Purchase of a Significant
New Property…
…but is unable to sell a
piece of existing property
in time to do the deal…
…Park the New Property in
an EAT; 180 more days are
available to sell the Old
Property and complete the
Section 1031 Exchange….

75. Case Study 3
ACBD-Delayed, Build-to-suit (or Improvement) Exchange
Direct Format

76. COMMERCIAL PROPERTY FOR RAW LAND WITH
IMPROVEMENTS
Taxpayer sells an existing
commercial property…
…EAT buys a vacant lot
and builds a new building
with the funds…
…and delivers to Taxpayer
as improved, within 180
days….

78. Case Study 4
ACBD-Delayed/Simultaneous Build-to-suit Exchange
Reverse Format - Exchange Last

79. INDUSTRY SPECIFIC BUILDING ON IDENTIFIED PROPERTY
180 Days (total) are available – Rev Proc 2000-37
EAT Builds a new building to
Taxpayer’s specs, using
borrowed funds…
..Taxpayer takes occupancy..
…then sells existing property..
…...And, Exchanges with the
EAT to finish the transaction…

81. Case Study 5
Delayed Exchange (Existing Property) Reverse Format -
Exchange First

82. BUY INVESTMENT PROPERTY ABUTTING A PRIMARY RESIDENCE:
Taxpayer deeds F & C rental
property to EAT…
..EAT borrows equity from
taxpayer or the bank..
..Equity $$ used to Purchase
abutting shore front land …
…EAT sells rental property to a
Buyer to pay off the debt..

84. 4 $imple Qualification
Questions…

85. 1. What’cha Got?
2. Howd’ya Get It?
3. What else ‘ya Got?
4. What’cha Want?

86. 1. What’cha Got?
– How has the property been used in the
client’s hands?
– Has there been personal use of the
property? (Rev Proc 2008-16)
– Does the property include personal
property or other intangibles?
– What is the Purchase Price Allocation?

87. 2. Howd’ya Get It?
– As the result of a previous Exchange?
– Is the property from an estate or family, or
was it gifted?
– How long has the property been owned?
– What is the Adjusted Cost Basis?

88. 3. What else ‘ya Got?
– Is there other property being sold?
– Are there other property rights or
easements?
– Any excess land associated with their
primary residence?
– Does the transaction need to be bigger,
smaller or done in stages?
– “Find a way to make it bigger; find a way
to make it smaller” Warren G. Harding

89. 4. What’cha Want?
– What is the short term/long term strategy
for the property?
– Ideally the value should be even or up.
– An important element of building wealth is
the use of untaxed funds.
– Diversify in type, location, quantity &
quality of the Replacement Property.
– In an Exchange, the adjusted cost basis
shifts first, followed by the cash or debt.

90. Break Time…

91. Alternate Exchange Opportunities
THERE ARE A MYRIAD OF OTHER
INVESTMENT OPPORTUNITIES THAT
CAN BE ACCOMPLISHED WITH AN
EXCHANGE!

92. Tenants - In - Common
TENANTS-IN-COMMON (TIC’s) OFFER A STRESS-FREE
OPTION TO OWN INVESTMENT GRADE REAL ESTATE
Tenants-in-common
Any Real Property

93. Why Use TICS in an Exchange?
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94. Who is a Typical TIC Investor?
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95. TIC Property Characteristics
• Undivided Fractional Ownership in Real Estate
• Each Owner Receives a Proportional Share of Net
Revenues
• Under Sponsored Structure, TIC’s are:
• Grade “A” Real Estate Investments
• Professionally Managed
• The Result Is A Passive Ownership
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96. Direct Ownership vs. TIC
Conventional Direct Ownership 1031 Tenant-in-Common
Property Exchange Property Exchange
Lower returns on less desirable properties Higher returns on institutional-quality properties
Difficult to comply with Section 1031 45 day ID Easy to comply with Section 1031 45 day ID rules
rules; Exchangor must find properties when properties are pre-identified
Difficult to match Section 1031 exchange debt Easy to match Section 1031 exchange debt and
and equity equity
Investor must negotiate and arrange loan Prearranged financing
Expensive and time-consuming property Professional proven property management in
management place. You receive a monthly or quarterly income
check.
Cash flow, depreciation, and appreciation Cash flow, depreciation, and appreciation potential
potential
Ability to use the Section 1031 exchange again Ability to use the Section 1031 exchange again
Ability to refinance and distribute proceeds “tax Ability to refinance and distribute proceeds “tax
free” free”

97. Diversification
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98. How Does it Work?
1. Client sells investment property (“Relinquished Property”).
2. Proceeds transferred to QI (Edmund & Wheeler, Inc.)
3. Client and advisor identify potential Replacement Properties through a
myriad of sources within their 45-day Identification Period.
4. Client is granted a reservation.
5. Client and advisor fill out necessary paperwork to close.
6. Client is on title and receives a deed to the Replacement Property.
7. Client assumes a % interest of non-recourse financing (1)
8. Client receives a % interest of the income generated from the property.
9. At the sale, the client receives a % share of any and all profits.
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99. Case Study
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100. Assumptions
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101. Investment Results
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102. Recap the Benefits

103. Umbrella Partnership Real Estate
Investment Trust (UP-REIT)
Exchange!
Any Real Property

104. What Is An UPREIT?
• Similar to a Mutual Fund For Real Estate Investors.
• Allows Exchanging Real Property Into Operating
Partnership (OP) Shares of Existing REITs
• REITs can convert existing properties into TICs allowing 35
ownership positions; then, under Section 721:
• TICs are then converted back to REIT shares and
investors then hold shares in the REIT’s entire portfolio.
• Portfolio is professionally managed with 95% of the net
income to investors.

105. Section 721 Exchange Overview
• Instead of Selling
and Exchanging,
The Investor
Contributes
Property to a
Partnership
• Receives Operating
Partnership (OP)
units.

106. UPREIT Benefits
• Transaction completed on a tax-deferred basis. If shares go to
an estate the ultimate recipients will receive a stepped-up
tax basis (An interest-free loan followed by tax forgiveness).
• Transaction can be structured by enabling property owner to
convert an interest in a specific property into a larger, more
balanced portfolio held by the UPREIT.
• Allows an interest in illiquid individual properties to become
more easily saleable; convert real estate to shares of stock.
• Convert a high-valued property into tiny, marketable pieces.

107. Oil & Gas Leases
INVESTORS CAN EXCHANGE REAL PROPERTY FOR
INTERESTS IN PRODUCING OIL & GAS ENTERPRISES
Any Real Property

108. Oil & Gas Lease
AN EXTREMELY VIABLE ALTERNATIVE FOR AN EXCHANGE.
• Working and Royalty Interest
• Leasehold Interest Allows the Right to
Search for and Produce Oil and Gas
• Fractional Owners Have the Same
Rights as a Single Owner and Can
subdivide or Offer for Sale on the Open
Market

109. Oil & Gas Lease Characteristics
• Liquidity
• Active Secondary Market
• Life of Production
• Supported by Qualified 3rd Party Reports
• Annual Return
• Average 8% - 12% (+) Over Term
• Tax Treatment
• 15% Depletion Allowance
• Valuation
• Valued on the Amount of Potential
Production

110. Oil & Gas Lease Benefits
• Immediate Economic Closing With Predictable Cash Flow
• Ability to Participate in the Future Production
• Highly Liquid Individual Fractional Ownership
• Diversification By Investing In One or Several Qualified
Working Interests in Different Markets

111. Structured Sales (Section 453)
STRUCTURED SALES ALLOW THE INVESTOR TO ARRANGE
FOR A FUTURE PAYCHECK
Exchange!
Any Real Property

112. The Structured Sale
The Structured Sale is a method for selling appreciated assets such as real
estate and businesses that allows Sellers to:
•Defer capital gains taxes to future years
•Collect a stream of guaranteed payments over a set number of years
•Without having to trust the Buyer or to get an unwanted Balloon payment
In Addition:
•Makes the transaction safer for the Seller; guarantor is Allstate, not the Buyer
•Can be combined with a Section 1031 Exchange or be used alone
•Absolutely no risk of getting the old property back
This method was developed in 2005 and is becoming a sought-after method
for tax deferral when selling a business or real estate.

113. The Structured Sale & Section 1031
• Identified as an Alternative Strategy In Exchange
Agreement
• Gives Buyer Full Title
• Can Be Used When Replacement Properties Cannot Be
Identified and/or Purchased in the 45/180 Day Time
Restraints
• Can Be Used For Taxable “Boot”

114. The Structured Sale & Selling a Business
• There is Inherent Risk Associated With a Typical
Installment Sale
• The Structured Sale Provides a Safe Alternative
• Can Be Used in an Exchange for non “like-kind” Items like
goodwill and FF&E; or
• Can be used for the entire transaction amount if the client
wants to exit the real estate class

115. The Structured Sale

116. How Do You Summarize 109 Slides?

117. Quickly!

118. Section 1031 is the
same as an interest-
free loan from the
Government

119. Section 1031 is used in
less than 10% of the
transactions that it
should be!

120. Accounting
Professionals owe it to
their clients to
understand this
powerful tool!

121. Section 1031 is about
Relocation and
Reallocation of Assets
without Paying Capital
Gains!!!

122. Any U.S. Real Property
Can Be Exchanged For
Any Other U.S. Real
Property!

123. Section 1031 can be
used to dramatically
increase the value of
holdings by leveraging
Uncle Sam’s money.

124. Ask the 4 Questions
1.What’cha Got
2.Howd’ya Get It?
3.What Else ‘ya Got?
4.What’cha Want?

125. Every tax-paying entity
qualifies for a Section
1031 Exchange!

126. Personal property can
also be Exchanged.
“Like-kind” is literal!

127. There are replacement
options available for
Section 1031
Understand Them!

128. Tenants-In-Common
Management-Free
Real Estate
Investments in Grade A
Properties

129. UPREIT
Exchange into a Real
Estate Investment
Trust

130. Oil & Gas
A timely alternative to
owning real estate with
the same benefits and
flexibility.

131. Structured Sales
An annuity based
“Paycheck” for failed
exchanges and
business transfers.

132. Also…with Section 1031 alone:
• Must employ a Qualified Intermediary
• Time limits of 45 and 180 days
• Properties must be “Like-Kind”
• Business or Investment Purpose
• Relinquished and Replacement Properties held
by same taxpayer
• Exchanges can be done either forward (Cases #1
& #3) or reverse (Cases #2, #4 & #5)

133. If you have questions...
If your clients have
questions…
If you want to
strategize…..

134. …Contact Us
For over 27 Years Edmund & Wheeler has helped
clients to defer $Millions…

135. Congratulations!
You are now a member of the elite, the
proud, the educated….
Edmund & Wheeler, Inc.
Alumni Association
Membership has it’s benefits!
www.section1031.com/alumni

136. For over 27 Years Edmund & Wheeler has helped
clients to defer $Millions…
…we want to earn the
distinction of being your
Section 1031 resource.
603-444-0020
www.Section1031.com

137. Thank you for your
valuable time!!!