(The following is an excerpt from our 1031 Advisor newsletter located here )
In PLR 2000730002, which was released on July 27, 2007, the IRS approved an arrangement between related parties and their exchange of different properties. Under Section 1031(f)(2)(C), exchanges of undivided interests between related parties in different properties, which result in each taxpayer holding either an entire interest in a single property or a larger undivided interest in any of such properties, is NOT subject to the two year holding period.
In PLR 200728008, the IRS reaffirmed that a sale to a related party is NOT subject to the two year holding rule. In this case, an exchanger sold two relinquished properties via qualified intermediaries to a related party in two separate reverse exchanges.
In PLR 200728037 the IRS ruled that a like-kind exchange by an UPREIT, in which no boot was triggered, would not be treated as a sale of property. In addition, the IRS ruled that the relinquished property would not be treated as property sold for purposes of the seven property safe harbor in section 857(b)(6)(D)(iv). This ruling was first articulated in PLR 200712013 and is virtually identical to PLR 200701008 also issued earlier this year.
Rep. Adrian Smith of Nebraska (R) introduced HR 3039 in July, 2007. This legislation would double the time period for the identification of potential replacement properties and the completion of a like-kind exchange, from 45 to 90 days and 180 to 360 days respectively.
