Level 4

1031 exchange when a 1099-S is received before the exchange is complete

Forum|Forum|7 years ago
March 14, 2019
10 replies
50 views

Please help! client sold his residental rental building on Dec. 28, 2018 earmarked thru the contract for 1031 exchange. he received a 1099 S FORM with line 2 filled in for gross proceeds of $760,000. How do I notify the IRS that this transaction is a 1031 exchange. He has the same type of residental rental building that he will be buying with that money in roughly 3 weeks, his loan has been approved, And what do I do with the depreciation he has taken from the 10 years on the old building. What do I do with the closing costs, if anything. Thank you

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I

Intuit_Devin

Level 4

CORRECTED: The 8824 will explain the 1099-S. You may need to file an extension in order to have all the closing details necessary from this transaction.

M

Marc-TaxMan

Level 7

WRONG @Intuit_Devin

File 1040 without 8824 because the exchange is not yet completed PREMATURLEY TERMINATES the exchange period.

I

Intuit_Devin

Level 4

@corinne91 Marc is correct. I was confusing the 1031 reporting rules with options trading rules (where you report a transaction in the year the transaction closes rather than opens). For the 1031 you should prepare the 8824 in the year the transaction opened. Hope you see this.

M

Marc-TaxMan

Level 7

@corinne91 NOTE: actual filing 2018 1040 TERMINATES the 180 day exchange peroid early.

If you file 2018 1040 before leg 2 of exchange is done, the exchange fails as not bening completed during allowed exchange period.

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