CES Qualified Intermediary Role & Responsibilities

Question 1

What is the primary role of a Qualified Intermediary (QI) in a 1031 exchange?

Accepted Answer

To hold exchange proceeds and facilitate the exchange to avoid actual or constructive receipt by the taxpayer

Answer

To provide legal advice to the taxpayer

Answer

To appraise the relinquished and replacement properties

Answer

To negotiate the purchase price of the replacement property

Question 2

Who is expressly disqualified from serving as a QI under Treasury Regulations?

Accepted Answer

The taxpayer's attorney who represented them in the last two years

Answer

A licensed title company

Answer

The taxpayer's real estate agent from a prior transaction more than two years ago

Answer

An independent exchange company

Question 3

What document does the QI use to acquire the rights to the relinquished property without taking title?

Accepted Answer

An assignment agreement

Answer

A trust deed

Answer

A deed of reconveyance

Answer

A purchase option agreement

Question 4

Where must the QI hold 1031 exchange proceeds?

Accepted Answer

In a segregated, separate account, trust, or escrow for each exchanger

Answer

In a co-mingled company operating account

Answer

In a federally insured savings account in the QI's name

Answer

In the taxpayer's personal escrow account

Question 5

What is 'constructive receipt' in the context of a 1031 exchange?

Accepted Answer

When the taxpayer has control over or the ability to access the exchange proceeds

Answer

The physical receipt of the deed to the replacement property

Answer

When the QI delivers wire proceeds to the closing agent

Answer

The transfer of title at closing of the relinquished property

Question 6

What must the exchange agreement between the taxpayer and QI restrict to prevent constructive receipt?

Accepted Answer

The taxpayer's access to exchange funds except upon completion of the exchange, exchange failure, or expiration of the exchange period

Answer

The taxpayer's ability to select replacement property

Answer

The QI's ability to invest exchange funds

Answer

The taxpayer's right to file Form 8824