Martha and Don Woods PA

New Smyrna Beach, Florida 32169

1. The dealer trap occurs when you develop land. You may lose 1031 opportunity if IRS determines that the land is inventory.
   
   
2. The partnership pitfall prevents distributing an interest in a partnership. The partnership itself can exchange partnership property.
   
   
3. The reverse occurs when a taxpayer acquires Replacement Property before selling Relinquished property. When the exchange guidelines were published in April of 1991, there were no safe harbor guidelines for reverse exchanges. The IRS has released a "revenue procedure" effective September 15, 2000 to provide a safe harbor for the reverse exchange.
   
   
4. When you build you are limited by the 180 day period. In addition, you can not exchange into an improvement built on land that you already own.
   
   
5. The related party problem creates a two year mandatory holding period if you buy from or sell to a related party (actual relatives and controlled entity).
   
   
6. Seller Carry Back financing can be taxable on the "Installment Sale Basis". Be sure to discuss this issue with your accountant or tax advisor to see how this will effect your exchange. There are a few options you can consider.