Question: Your client decided to do a like-kind exchange. However, she did not use a qualified intermediary. Instead, she took the money from the sale and waited to purchase a replacement property later. Can she report this as a like-kind exchange?
Answer: Unfortunately, the answer is no. That is because she received the proceeds from the sale of the relinquished property (referred to as “constructive receipt”). [§1031(b)]
She may still qualify to defer recognizing the gain by reinvesting in a Qualified Opportunity Fund (QOF) within 180 days of the first sale. For more information, see the IRS’s webpage on investing in Qualified Opportunity Funds.
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.