There is a wide variety of asset categories for which 1031 exchange are applicable. Outside of the more traditional categories of real estate, vehicles and so on, the distinctive issues that need to be addressed are:
- Like-kind determinations. There are often subtle issues that may affect the feasibility of an exchange regarding whether or not assets are like-kind. Care should always be taken to get an unambiguous determination from experts that the contemplated exchange will pass scrutiny.
- Transfer of title and Leasing. In a reverse exchange, the EAT must hold suitable Qualified Indicia of Ownership for the parked asset. Accordingly, it is imperative to arrange for a bill of sale or other asset-specific conveyance of title to the EAT when the asset to be parked is transferred to the EAT. Also, if the asset is to be in the possession of or used by the Exchangor, there should be some form of Lease or other arrangement to that effect.
- Ancillary tax strategies. Typically, the EAT will have a reseller permit that exempts it from having to pay local sales or use taxes when it acquires the asset on behalf of the Exchangor and which requires it to collect and remit appropriate taxes of this nature when it transfers ownership of the asset to the Exchangor at the conclusion of the exchange.
Our processes for reverse exchanges of assets in these more general categories are proven and comprehensive.