Hi, I need a second opinion regarding a 1031 exchange in California. I have been
told I cannot do an exchange but I want to see if there is a way. Anyways, I own 1/14 share in a partnership that is
set up as S-corp. The 14 partners are likely splitting up after the sale, but I would still
like to do an exchange on my 1/14 portion .. Is
there a way? Thanks
IMHO, the answer is no.
It appears you own an intangible (partnership interest). Intangibles are not eligible under 1031(a)(1)(D) - it specifically says interests in a partnership are NOT eligible for a tax free exchange.
Just thinking aloud here. What if the s-corp distributed the building as TIC shares in the building?
That way you would have an interest in real estate which is 1031-able.
The issue then is how long have you owned them?
I believe the distribution would be taxable as a capital gain, or at least the amount of the distribution that exceeds the cost basis. If each individual received a taxable distribution, then the cost basis will be stepped up to the distribution amount. Selling now is not a taxable event, so no 1031 is needed.
I believe the distribution would be taxable as a capital gain, or at least the amount of the distribution that exceeds the cost basis. If each individual received a taxable distribution, then the cost basis will be stepped up to the distribution amount. Selling now is not a taxable event, so no 1031 is needed.