Reporting rental income on parked property in reverse like kind exchange

BPM11 · ‎10-16-2022

Are rental income and expenses on parked property used for like kind exchange reported on my client's 2021 schedule E, where replacement property was purchased in 2021 using like kind exchange facilitator, and relinquished property not sold until year 2022. If so, do I use 2022 sale of relinquished property to determine basis and use that basis amount for 2021 depreciaiton?

George4Tacks · ‎10-17-2022

The 1031 should be solely in 2022, when the property is sold. The sale property was still in service all of 2021 and did not sell until 2022 when it's depreciation would end.

The replacement property was not in service until it was swapped with the relinquished property, so it would not be depreciated until 2022.

Who owned the replacement property in 2021?

Answers are easy. Questions are hard!

BPM11 · ‎10-19-2022

Thanks very much for your response.

I think that, technically, the replacement property was "parked" in tax year 2021. ie title held by LLC formed by the Exchange company. The exchange company did create agreement allowing client to manage property while parked (which included all time the parked property was held by the LLC in year 2021)

sjrcpa · ‎10-19-2022

Someone has to pay tax on the 2021 rental income. I don't think the exchange company coughed it up. Did the exchange company issue a 1099 to your client?

The more I know the more I don’t know.