1031 exchange question

[mike9]

Client sold relinquished property October 2018 and the replacement property March 2019 within the 18o and 45 day windows.

How will I report this in pro series. One answer I got from a practitioner was to use the Installment sales but this may trigger recapture gains.

Second question if I may, the client sold and bought like kind Hotel which includes Furniture and equipment . Does such personal property also qualify as a 1031 exchange.

Thanks so much for your help

Mike

[abctax55 · Accepted solution]

Report the beginning of the § 1031 on the 2018 return ('cuz you have to stop the depreciation).  Zero out/suppress the realized gain - I'm sure HOW in PS as I use Lacerte.

Personal property doesn't qualify for § 1031 treatment effective 1.1.2018 per TCJA of 2017.  So you'll need to allocate the sales price and report the gain related to those assets on the 2018 return.  

Determine that allocation of the sales price could be a lot of fun....were those assets listed separately on the deprec. schedule?

[TaxGuyBill]

Does the 8824 go on the 2019 tax return?  Or the 2018 tax return?

[abctax55]

I don't remember, Bill.  It's been ages since I had one that overlapped.

But I think you do complete it for 2018.  Because the 2018 return better not be filed before the back-end of the § 1031 has been completed !  

[mike9]

Thanks to the both of you. I was thinking of overriding the gain as well. So I will carry the deferred gain on the Balance Sheet  and report it on  8824 in 2019.

[mike9]

Wait I am confused. How can you complete 8824 in 2018...I get an error if I put in any dates other than 2018

[abctax55]

"Form 8824 is prepared and filed in the same tax reporting year in which the relinquished property was transferred/sold."   
From the instructions for F 8824.

@mike - I don't think you *have* to add the new assets with the 2019 date.  AND, you may be able to override the error (again, I use Lacerte).

[George4Tacks]

The exchange is reported on the 2018 return. https://accountants-community.intuit.com/search?utf8=%E2%9C%93&q=1031&button= for ProSeries

As stated you pick up the new depreciation in 2019. 

You possibly need to include the 8594. Hotel and sale of a group of assets of a business? https://www.irs.gov/pub/irs-pdf/i8594.pdf