The newly issued Revenue Procedure (REV. Proc.2000-37) provides a safe harbor for
reverse exchanges entered into on or after September 15, 2000 provided the taxpayer
does the following:
1. The safe harbor allows a taxpayer to treat the Exchange Accommodation Titleholder
(E.A.T.) as the beneficial owner of the property for federal income tax purposes.
The parked property must be held under a Qualified Exchange Accommodation Agreement.
2. The E.A.T. must hold legal title or similar ownership to the property being parked.
3. The taxpayer must have the intent to park with E.A.T. either the relinquished or
the replacement property as part of a §1031 tax deferred exchange.
4. No later than five (5) business days after the transfer of ownership of the property
to the E.A.T., the taxpayer and E.A.T. must enter into a written agreement indicating
that this is an exchange and that the accommodating party will be treated as the owner
of the property for tax purposes.
5. Within 45 days after the transfer of ownership of the replacement property to the E.A.T.,
the taxpayer must identify the property to be relinquished.
6. No later than 180 days after the transfer of ownership of the property
(replacement or relinquished) to the E.A.T., the replacement property must be
transferred to the taxpayer or the relinquished property to the ultimate to buyer.
An E.A.T. that satisfies the requirements of a Qualified Intermediary under the
regulations, may also enter into an exchange agreement with the taxpayer to serve as the
Qualified Intermediary in a simultaneous or deferred exchange. The taxpayer can guarantee
some or all of the obligations of the E.A.T., including secured or unsecured debt incurred
to acquire the replacement property. The taxpayer can also loan or advance funds to the E.A.T.
The parked property can be leases by the E.A.T. to the taxpayer or enter into a property
management agreement with the taxpayer.
*The preceeding article is provided complements of Exchange Resources Inc.
To speak with an agent about tax-deferred exchanges,
please use one of the following forms or contact us via phone.
