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'Tax-Free Swaps: Using Section 1031 Like-Kind Exchanges to Preserve Investment Net Worth' by Prof. Bradley T. Borden has been just Published by DNA
Eagleville, PA (PRWEB) November 19, 2007 -- Tax law professor Bradley T. Borden and DNA Press announce the publication of "Tax-Free Swaps: Using Section 1031 Like-Kind Exchanges to Preserve Investment Net Worth," (ISBN13: 9781933255286). Following in the wake of extensive press coverage of section 1031, this timely publication details the potential benefits, requirements and scope of tax-free like-kind exchanges under section 1031 of the Internal Revenue Code. Using diagrams, practical examples and an easy narrative style, Borden's book demystifies like-kind exchanges, making them accessible to all taxpayers.
Many property owners understand that section 1031 provides that no gain or loss is recognized when a property owner exchanges business-use or investment property (the "relinquished property") for like-kind business-use or investment property (the "replacement property"). They are not, however, aware of section 1031's scope. "Tax-Free Swaps" "de-mystifies many aspects of like-kind exchanges," comments Kelly Alton, General Counsel of Nationwide Exchange Services.
A simple example (typical of those in the book) illustrates the benefits of section 1031. Tim owns Redstone Apartments, which he purchased for $100,000. Redstone is worth $500,000. Ben owns Quarry Warehouse, which he purchased for $150,000. Quarry is worth $500,000. If Tim were to sell Redstone for cash, he would recognize gain equal to (and would have to pay tax on) the $400,000 of appreciation. Similarly, if Ben were to sell Quarry for cash, he would recognize gain equal to (and would have to pay tax on) the $350,000 of appreciation. If, however, Tim and Ben both hold their respective properties for business or investment, they can "swap" properties, under section1031 and avoid gain recognition. Consequently, neither would owe any tax on the exchange. Each of them would take a carry-over basis in his replacement property: Tim would take Quarry with a $100,000 basis, and Ben would take Redstone $150,000 basis. If either person were to sell his replacement property at a later date, he would recognize gain equal to -- and would pay tax on -- the appreciation. Either Tim or Ben could, however, dispose of their replacement properties through future exchanges. By engaging in "serial" exchanges, they could defer gain recognition and tax indefinitely.
Of course, taxpayers who are candidates for this type of "direct swap" rarely find one another in the marketplace. More commonly, Tim would want to sell Redstone to a third party and acquire Quarry from Ben. Fortunately, in this situation, section 1031 permits Tim to sell Redstone and to deposit the sale proceeds (often referred to as "exchange funds") with a "qualified intermediary." So long as Tim meets certain time limits and other restrictions, he could use the exchange funds to purchase replacement property. This type of transaction is commonly referred to as a "multi-party exchange." If the transfer and acquisition do not occur simultaneously, the transaction would be a "deferred exchange."
In some situations, a property owner may not be able to sell relinquished property before acquiring the replacement property. In such situations, the property owner may benefit from a "reverse exchange." If a person doing an exchange wants to use proceeds from the sale of the relinquished property to construct improvements on replacement property, an "improvements exchange" may be appropriate. The broad scope of section 1031 depicted by these numerous exchange structures is beneficial to property owners who are aware of their availability.
"Tax-Free Swaps" explains the various exchange transactions and identifies their potential benefits and risks. More importantly, Prof. Borden "has more than succeeded in ... in balancing technical description with presentation," says Christian Johnson, tax law professor and CPA. "Borden is able to translate such technical terms as improvements exchange, exchange accommodation titleholder, and non-safe harbor reverse exchange into understandable and readable prose." As Stanley Blend, Chairman of Oppenheimer, Blend, Harrison & Tate, Inc., puts it, "Tax-Free Swaps" "will be extremely useful to taxpayers as well as their advisors."
"Tax-Free Swaps: Using Section 1031 Like-Kind Exchanges to Preserve Investment Net Worth", (ISBN13: 9781933255286) is available to libraries and bookstores through the distribution channels of Ingram and Baker & Taylor, and to readers at Amazon.com, www.dnapress.com, and our distributor IPG books (www.ipgbook.com) or it can be ordered through Barnes&Noble and Borders bookstores.
BOOK DETAILS:
ISBN13: 9781933255286
Book binding: Hard cover
Pages: 334
Price: $29.95
First printing: 12,000 copies
Marketing budget: $12,000
For more information, please contact:
THE PUBLISHER
DNA PRESS LLC
editors@dnapress.com
Tel. 267 760 4667
THE AUTHOR
Bradley T. Borden
Associate Professor of Law
Washburn University School of Law
1700 SW College
Topeka, Kansas 66621
Phone: (785) 670-1857
Fax: (785) 670-1024
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