CES Exchange Timelines & Deadlines 1 — Questions and Answers
Question 1: How many calendar days does a taxpayer have to identify replacement property after closing on the relinquished property?
- 30 days
- 45 days (Correct answer)
- 60 days
- 180 days
Correct answer: 45 days
The taxpayer has exactly 45 calendar days from the closing of the relinquished property to identify potential replacement properties.
Question 2: How many calendar days does a taxpayer have to close on replacement property after transferring the relinquished property?
- 45 days
- 90 days
- 180 days (Correct answer)
- 365 days
Correct answer: 180 days
The exchange period is 180 calendar days from the date of transfer of the relinquished property.
Question 3: If a taxpayer's 180th day falls on a Sunday, when must the exchange close?
- The following Monday
- The preceding Friday
- The Sunday itself (no extension) (Correct answer)
- The next business day after the Sunday
Correct answer: The Sunday itself (no extension)
The 180-day deadline is absolute — it does not shift for weekends or holidays, and the exchange must close by that date.
Question 4: What happens if a taxpayer's tax return due date (including extensions) falls before the 180th day of the exchange period?
- The exchange period is automatically extended to 180 days
- The exchange period ends on the tax return due date, whichever is earlier (Correct answer)
- The taxpayer must file for a special IRS extension
- The 180-day period always controls
Correct answer: The exchange period ends on the tax return due date, whichever is earlier
The exchange period ends on the earlier of 180 days after the relinquished property closing or the due date of the taxpayer's tax return (including extensions).
Question 5: Can a taxpayer extend the 45-day identification period for any reason?
- Yes, with written consent from the QI
- Yes, if a natural disaster has been federally declared (Correct answer)
- No, extensions are never granted under any circumstances
- Yes, if the replacement property is located out of state
Correct answer: Yes, if a natural disaster has been federally declared
The IRS may extend the 45-day identification period in cases of presidentially declared disasters, but not for ordinary circumstances.
Question 6: What is the consequence of failing to identify replacement property within the 45-day window?
- The exchange period is reduced to 90 days
- The entire exchange fails and proceeds become taxable (Correct answer)
- The taxpayer can substitute identified property with any real estate
- Only a 10% penalty applies to the gain
Correct answer: The entire exchange fails and proceeds become taxable
Failure to timely identify replacement property results in a failed exchange, making all deferred gain immediately taxable.
CES Exchange Timelines & Deadlines 1
How many calendar days does a taxpayer have to identify replacement property after closing on the relinquished property?