1918 - First income tax law

1921 - Section 202 of Internal Revenue Code states that gain or loss not recognized on exchanges of like-kind property

1924 - Non like-kind exchanges excluded from Section 202

1928 - Code section changed to Section 112(b)(1)

1954 - Section 1031 enacted

1975 - Starker exchange; Tax court approves delayed exchange

1977 - Tax court reverses prior ruling, invalidating delayed exchanges

1979 - 9th Circuit reverses, reinstating initial ruling and creating delayed exchange

1984 - Congress amends Section 1031; 45 day identification period and 180 day exchange period and partnerships excluded

1991 - Regulations 1.1031 passed

2002 - Revenue Procedure 2002-22 issued by IRS; 15 points to clarify TIC interests

The tax deferred exchange procedure is outlined under the Internal Revenue Code Section 1031, and involves a series of rules and regulations that must be met in order to take full advantage of this great tax benefit. Andrew Stuart Asset Management can assist you through the process of a tax deferred 1031 exchange and make your Tax Deferred Section 1031 Exchange transaction seem effortless!

When income taxes were first imposed in 1918, gain or loss recognition was required on all disposition of property. Tax Deferred Exchanges were first introduced in 1921 allowing owners of investment property to defer the payment of capital gains that is normally due upon the sale of investment properties. Since inception, there have been five major amendments made to the Tax Deferred Exchange as we know it today.

One of the most important changes was the 1979 Starker decision in which the U.S. Court of Appeals enabled the non-simultaneous or "delayed" Section 1031 Exchange to qualify for tax deferral. This gave investors the time necessary to find desirable replacement property by using an Intermediary.

The most significant change made to the Treasury Regulations was effective June 10, 1991 and validated the delayed 1031 exchange and simplified the exchange process. By providing specific guidelines, these Regulations were welcomed by real estate investors who were previously uncertain of the viability of Section 1031 Exchange transactions.

Revenue procedures are frequently changing the perspective of tax deferred exchanges. Contact us for the most current information that could affect your tax deferred exchange.