WHY EXCHANGES FAIL » QUALIFIED INTERMEDIARY

WHY EXCHANGES FAIL

The primary reason deferred exchanges fail is because a taxpayer is unable to properly identify replacement properties before the expiration of the 45-day identification period.

This situation is unrelated to the structure or integrity of the Exchange and needs to be addressed by the taxpayer before the sale of the relinquished property. We recommend that the taxpayer have a good understanding of the type and location of potential replacement properties before entering into the Exchange.

Other reasons Exchanges fail can be avoided by the taxpayer’s use of a Qualified Intermediary who has knowledge and experience in orchestrating an Exchange and who can demonstrate ability to perform the duties of the Qualified Intermediary in a timely, complete fashion.

The taxpayer's Exchange may fail for any of the following reasons:

• Establishment of an agency relationship between the taxpayer and a disqualified person acting as the Qualified Intermediary.
• Actual or constructive receipt by the taxpayer of some or all of the proceeds held by the Qualified Intermediary prior to the receipt of replacement property.
• Lack of established intent to Exchange.
• Exchange of non-like-kind or non-qualifying properties.
• Inclusion in the Exchange of several associated transactions which would otherwise have been taxable.
• Exchange between related parties with one party subsequently selling the property received in the Exchange.

  The Exchange Authority,  Helps you monitor your Exchange .  We stay on top of all critical dates, answer every question, and provide a fully documented audit trail to support the transaction.  Contact Exchange Authority today to learn more about how we can help you handle this complex transaction effectively and efficiently.