CES Exchange Structures & Strategies

Question 1

In a delayed (Starker) exchange, what is the correct order of events?

Accepted Answer

Sell relinquished property first, then identify and acquire replacement property within deadlines

Answer

Acquire replacement property first, then sell relinquished property

Answer

Simultaneously sell and acquire both properties on the same day

Answer

Identify replacement property first, then list the relinquished property

Question 2

What distinguishes a 'reverse exchange' from a standard delayed 1031 exchange?

Accepted Answer

In a reverse exchange, the taxpayer acquires the replacement property before selling the relinquished property

Answer

In a reverse exchange, no QI is needed

Answer

In a reverse exchange, there are no identification or deadline requirements

Answer

In a reverse exchange, the exchange is tax-free permanently

Question 3

What is an 'improvement exchange' (also called a build-to-suit or construction exchange)?

Accepted Answer

An exchange where the replacement property is improved using exchange funds held by the EAT before being transferred to the taxpayer

Answer

An exchange where the taxpayer builds a new property on relinquished land

Answer

An exchange where improvements are made to the relinquished property before sale

Answer

An exchange structure that allows exchange of raw land only

Question 4

Which type of exchange involves two parties directly trading properties with each other?

Accepted Answer

Two-party direct exchange

Answer

Delayed exchange

Answer

Simultaneous exchange

Answer

Improvement exchange

Question 5

What is a 'parking arrangement' in the context of a reverse or improvement exchange?

Accepted Answer

The EAT temporarily holds title to one of the properties to facilitate the exchange

Answer

The QI parks exchange funds in a money market account

Answer

The taxpayer parks the proceeds in a retirement account

Answer

The replacement property is listed for sale while exchange proceeds are held

Question 6

Which IRS Revenue Procedure provides the safe harbor guidelines for reverse and improvement exchanges?

Accepted Answer

Rev. Proc. 2000-37

Answer

Rev. Proc. 1990-12

Answer

Rev. Proc. 2010-14

Answer

Rev. Proc. 2017-51