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Tax Deferred Exchanges

TAX DEFERRED EXCHANGE                                                                                                  
A tax deferred exchange is one in which you transfer property you use in business or hold for investment and later you receive like-kind property you will use in business or hold for investment. (The property you receive is replacement property.) The transaction must be an exchange (that is, property for property) rather than a transfer of property for money used to buy replacement property.

If, before you receive the replacement property, you actually or constructively receive money or unlike property in full payment for the property you transfer, the transaction will be treated as a sale rather than a deferred exchange. In that case, you must recognize gain or loss on the transaction, even if you later receive the replacement property. (It would be treated as if you bought it.)

You constructively receive money or unlike property when the money or property is credited to your account or made available to you. You also constructively receive money or unlike property when any limits or restrictions on it expire or are waived.

Whether you actually or constructively receive money or unlike property, however, is determined without regard to certain arrangements you make to ensure that the other party carries out its obligation to transfer the replacement property to you. For example, if you have that obligation secured by a mortgage or by cash or its equivalent held in a qualified escrow account or qualified trust, that arrangement will be disregarded in determining whether you actually or constructively receive money or unlike property.

IDENTIFICATION REQUIREMENT                                                                                        
You must identify the property to be received within 45 days after the date you transfer the property given up in the exchange. This period of time is called the identification period. Any property received during the identification period is considered to have been identified.

If you transfer more than one property (as part of the same transaction) and the properties are transferred on different dates, the identification period and the receipt period begin on the date of the earliest transfer. 

The law firm of Robins & Robins, P.A. handles a variety of cases for banking institutions, lenders and creditors, in state and federal court, including bankruptcy court.   The objective in these cases is to recover the money that is owed to the client or, in some circumstances, to minimize the loss the client anticipates it will suffer.


Robins & Robins, P.A. based in Salisbury, MD serves the Delmarva Peninsula and Maryland ‘s Eastern Shore including Wicomico, Somerset, Worcester, Dorchester and Talbot Counties.



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| Phone: 410-749-3791

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© Robins & Robins, P.A. | Disclaimer
128 East Main Street, P.O. Box 506, Salisbury, MD 21801
| Phone: 410-749-3791


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