Practice Test GeeksCES - Certified Exchange Specialist Practice Test
← All CES Flashcard Decks

Exchange Structures & Strategies Flashcards

6 cards from real CES practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Exchange Structures & Strategies flashcards as text

  1. What is a 'tenant-in-common' (TIC) interest and how can it be used in a 1031 exchange?

    Answer: A TIC interest is an undivided fractional interest in real property that qualifies as like-kind replacement property

    A tenant-in-common interest is an undivided fractional ownership in real property and qualifies as like-kind replacement property in a 1031 exchange.

  2. What is a Delaware Statutory Trust (DST) and why is it used as replacement property in 1031 exchanges?

    Answer: A DST is a trust structure that holds real property and issues beneficial interests that qualify as like-kind replacement property

    A DST holds real property and issues beneficial interests to investors; under IRS Rev. Rul. 2004-86, these interests qualify as like-kind replacement property.

  3. A taxpayer wants to use exchange proceeds to purchase a vacation home that they will occasionally use personally. Is this a qualifying replacement property?

    Answer: No, property used personally does not qualify unless it meets the investment use test

    A vacation home must meet specific requirements (held for investment, rented at fair market value, limited personal use) to qualify — personal use alone disqualifies it.

  4. Under Rev. Proc. 2008-16, a dwelling unit acquired in a 1031 exchange qualifies for personal use conversion if it has been held for at least how long?

    Answer: 24 months

    Rev. Proc. 2008-16 provides a safe harbor where a dwelling unit must be held for at least 24 months after the exchange before converting to personal use.

  5. In a 1031 exchange involving a multi-asset property (e.g., a motel with furniture), how are the personal property components treated after the TCJA?

    Answer: Personal property components are excluded from 1031 exchange treatment and may be taxable

    After TCJA, personal property (furniture, fixtures, equipment) within a multi-asset property no longer qualifies for 1031 exchange treatment and may trigger taxable gain.

  6. What is an 'umbrella partnership REIT' (UPREIT) and how does it relate to 1031 exchanges?

    Answer: An UPREIT allows property owners to contribute property in exchange for operating partnership units, which is an alternative to a 1031 exchange

    An UPREIT allows property owners to contribute property to a REIT's operating partnership in exchange for OP units — while not a 1031 exchange itself, it is a related tax-deferral strategy.