1031 EXCHANGES OF PERSONAL PROPERTY
Personal property refers to all property held for investment or productive use by a trade or business, tangible and intangible, that is not considered real property. The “like-kind” requirement is more challenging here, as the relinquished and replacement depreciable tangible personal property need to be in either the same class or NAICS code (a link to the NAICS website is located in the Related Links section on the right side of page).
Examples of personal property include the following:
- Aircraft
- Artwork
- FCC Licenses
- Railcars
- Service Trucks
- Office Furniture
- Collectibles
- Patents
- Copyrights
- Tugboats
As a qualified intermediary (QI) in a personal property transaction, Wachovia Exchange Services (WES) holds funds during the course of deferred exchanges.
The following steps are typically taken when facilitating a forward 1031 with WES as the QI:
- The taxpayer signs a contract to sell an asset(s) to the buyer.
- Prior to the property closing, the taxpayer retains (WES) to be the qualified intermediary, which will allow WES to prepare the exchange agreements, assignments, reassignment and assumption, identification of replacement property, and any other required documents.
- At the closing, the exchange funds are wired or a check is sent to WES.
- If the taxpayer does not acquire all replacement property within the first 45 days after the transfer of property, the taxpayer completes the Identification of Replacement Property exhibit and returns it to WES. In identifying personal property assets, the taxpayer should be as unambiguous as possible; for example, describing an automobile by its specific make, model, and year.
- The taxpayer has a maximum of 180 days in the exchange period (or until the tax filing deadline, including extensions, for the year of the sale of the property), to acquire any and all replacement properties.
- At the closing of the property to be purchased, WES wires the exchange funds or a check is sent to complete the exchange.
For more information about 1031 exchanges, contact Wachovia Exchange Services at (888) 693-5566.
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