Exchange Timelines & Deadlines Flashcards

A taxpayer closes the relinquished property on June 1. Their tax return (with extension) is due October 15. When does the exchange period end?

Answer: October 15 (the earlier date)

The exchange period ends on the earlier of 180 days from closing or the tax return due date; October 15 is earlier than November 28.

What should a taxpayer do if they want to ensure the full 180-day exchange period is available?

Answer: File for a tax return extension before the exchange period ends

Filing a tax return extension before the exchange period ends ensures the return due date does not shorten the 180-day exchange period.

Can a taxpayer revoke or change a replacement property identification after the 45-day period has passed?

Answer: No, identifications cannot be changed after the 45-day deadline

Once the 45-day identification period has expired, the taxpayer cannot change or revoke the identification.

In a reverse exchange, which property does the Exchange Accommodation Titleholder (EAT) hold?

Answer: Either the relinquished or replacement property, depending on the structure

In a reverse exchange, the EAT can hold either the replacement property (park-and-sell) or the relinquished property (buy-first), depending on which structure is used.

How long does the IRS allow for a reverse exchange safe harbor period under Rev. Proc. 2000-37?

Answer: 180 days

Under Rev. Proc. 2000-37, the safe harbor for reverse exchanges requires the EAT to transfer the parked property within 180 days.

What is the consequence if the taxpayer does not close on any identified replacement property within the 180-day exchange period?

Answer: The exchange fails and the proceeds are returned to the taxpayer as taxable income

Failure to close on replacement property within 180 days results in a failed exchange and the proceeds are treated as taxable.