Reverse 1031 Exchange / Date Like Kind Property Identified

[SBTS]

Hello Community:

I need help with a reverse exchange that I am entering and will lay out the facts:

1.  EAT acquires replacement property on 1/2/2019
2.  Taxpayer identifies property to relinquish on 2/10/2019 (within 45 days)
3.  Relinquished property transferred to ultimate buyer on 5/8/2019 (within 180 days)
4.  EAT transfers replacement property to taxpayer on 5/15/2019 (within 180 days)

Based on the above, when I am filing out form 8824, line 4, is pretty clear to me and will be 5/8/2019.  Also line 6 of form 8824 is crystal to me and it is 5/15/2019.

Since it is a reverse exchange, I am confused what will be the date on line 5 -- Date like kind property was identified by taxpayer -- will it be 2/10/2019 or 5/8/2019 ?  

Had this been a regular 1031 exchange -- first sell then buy -- I know what line 5 would be.

Please advise if you are familiar with reverse exchanges and have submitted for 8824 for your client. 

Many thanks!

[George4Tacks]

Taxpayer identified when they engaged EAT to buy the property. 1/2/2019

EAT bought the property and "sold" or transferred it to TP on 5/15/2019, which is what you said. 

The basic concept is the taxpayer hired some third party to buy and hold the property before they sold. That third party then can sell this to TP after TP sells their property. This makes it a sell then buy, since TP did not buy the property the EAT held until 5/15/2019.

[SBTS]

Thank you George4Tacks for your response. 

I believe the 1/2/2019 date is the starting of the 45-day period in which the TP has to identify the property it will relinquish.

Since it is a reverse exchange, I am not sure if the identification date in this example will be 2/10/2019 or 5/8/2019.

I am quite certain its one of these dates but not sure enough and need guidance from someone who has does these in the past. 

Selecting the incorrect date may inadvertently jeopardize the exchange.

[George4Tacks]

Here is my logic:

EAT is a third party to which you have no firm offer in to buy when EAT acquires the property. 

You sell on 5/8/19 and probably that same day agree to buy from EAT. If that is the case you ID on 5/8/19. When did the owner (seller) sign purchase agreement with EAT?

It has been quite some time since I did one of these, but my recall is that you treat EAT as just some property sitting out there and it is not IDed until a contract to buy is signed. 

Maybe @sjrcpa could help out. She used to be a great All-Star. 😘

[SBTS · Accepted solution]

Thank you George4Tacks for your attempt.

I spoke with a three different 1031 exchange experts -- was trying to save my silver bullets -- and was able to determine the date that needs to be recorded on line 5 of Form 8824. 

All three gave me the same date which is the date when the taxpayer received the property from the EAT.

Thank you for your help!