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Section 1031 Advisor Newsletter

CLARITY AND ACCURACY: YOUR COMPETITIVE ADVANTAGES IN 1031 EXCHANGES

Webster’s Dictionary defines guarantee as “an assurance of the quality of a product offered for sale.” A brief search on Google under “guaranteed 1031 Exchanges” yields 1,030,000 hits. Impressive!  But what exactly is being guaranteed? Your happiness? No errors? No penalties?  No taxes on an improperly handled Exchange? No loss of clients?

What is being guaranteed?  Many Advisors rely on "guarantees" by 1031 Exchange Companies. However, if mistakes are made or if taxes must be paid after a 1031 exchange, it is the taxpayer/customer who is often left holding the bag. Is it sufficient to refund the $1000.00 fee to the customer, if the failed exchange cost the customer $865,000.00 in taxes and penalties? You may be thinking, “Thankfully, I have not experienced errors, penalties and taxes related to an improperly handled Exchange.”  Yet.

Increased Section 1031 Exchange IRS Audits:  In September 2007, the IRS revealed the results of an internal audit of 385,000 Like Kind Exchanges from 2004. The audit revealed that a significant percentage of the 1031 exchanges contained errors and mistakes. As such, the IRS has implemented a plan to begin auditing Section 1031 Exchanges in earnest.

Advisors gain a Competitive Advantage through the use of two specific Strategies: Clarity and Accuracy

1)  Clarity: Ask questions until you are completely satisfied. To assist each client in planning a 1031 Exchange, we strive to understand completely the client's unique needs and goals. That initial step, while often overlooked, is crucial to prevent confusion, mistakes and errors later. This can protect you from IRS Advisor penalties too!

2)  Accuracy: Few clients actually want their Exchange to fail. Mistakes are commonly made due to a deadly combination of lack of tax expertise, lack of information regarding the client's needs and goals (as stated above), and lack of attention to detail at critical points during the Exchange. For example, we compute taxable gain and loss before the settlement statements are signed to avoid errors or mistakes before they happen.

How can you protect against errors and mistakes in your next 1031 Exchange?   Talk to the professionals at Strategic Property Exchanges, LLC.  Stephen L. Robison, Esq., is a Qualified Intermediary as well as a tax attorney, who is Board Certified as a Federal Tax Specialist. At Strategic Property Exchanges, we guarantee the clarity and accuracy of our work.  This ensures your client’s satisfaction, which reflects well on your referral of our services. Also, we guarantee the tax results of the 1031 Exchange with our Errors and Omission insurance and our tax opinion. We continuously concentrate on each Exchange to ensure that our exchanges are complete and error-free.  

Until we meet again!