les grans

I like being a newbie so much - it makes me feel young, sexy, nubile; it makes me tingle all over - that after 24 posts I'm gonna change my name... :spaz:

Darn it, jainen, can't we agree on *anything*? Definitely, one *must* do them in pencil (for the obvious reason) but why do you use a yellow pad while I do them on columnar pad? I've always done them on a columnar pad. What, are you a lawyer or something. Get with the program. Yellow pads are so ... so ... whatever! .. :lol:

Here's the example I was trying to resurrect; it's from the NYSCPA (?) website. Seems if the apartment house that OP exchanged for land had been nonresidential, like a factory or office building, we'ld have *ordinary* income as there's a piece of section 1245 which trumps section 1031. I'm quoting the following although I haven't given myself a chance to read it thoroughly. "Dictated not read" as any good CYA attorney would say... "What's worse, if the investor's building is commercial property, he will wind up with $700,000 of currently taxed ordinary income. Commercial property placed in service after 1980 and before 1987, and depreciated by an accelerated method, is considered IRC Sec. 1245 property. Under IRC Sec. 1245(a), all depreciation claimed is recaptured as ordinary income on a disposition, up to the gain realized in the transaction. "The IRC Sec. 1031 exchange does not protect the investor. There is IRC Sec. 1245((4) recapture even though the property is disposed of in an IRC Sec. 1031 exchange. The amount recaptured cannot exceed the sum of 1) any gain recognized on the transaction, plus 2) the FMV of property acquired that is not IRC Sec. 1245 property, and that is not taken into account in computing recognized gain. In the example, the investor will have fully taxed ordinary income of $700,000 regardless of whether the transaction is tax-deferred under IRC Sec. 1031. "There may be a more fundamental problem for a taxpayer who wants to exchange nonresidential property that 1) was bought after 1980 and before 1987, and 2) was depreciated using accelerated depreciation. If the property is exchanged today for a commercial or residential building and land, the property received will be part land and part IRC Sec. 1250 properties. "A technical reading of the statute calls for a full recapture when IRC Sec. 1245 property is replaced with non-IRC Sec. 1245 property."

See IRC section 1250(d)(4)... and I think there's a reg, too, maybe...

"My question is due to recapture of depreciation they are going to have $68,000.00 that will have to be reported as ordinary gain, correct?" I believe this is more correct than not, jainen's nonconcurrence notwithstanding. When you exchange from section 1250 (i.e. depreciable) real property into non-section 1250 (i.e. non-depreciable) real property, even though both are real estate, my [faint I admit] recollection is that there's a code section or regulation or ruling that forces recognition (maybe only as unrecaptured section 1250 gain, and *not* ordinary income, in this case) the accumulated depreciation on the surrendered property, even though *all* the requirements of the section 1031 exchange have otherwise been met. If it weren't midnite thirty I would go find the ruling. Maybe jainen is in a different time zone and is still awake and would go look for it....

"... he left out $14260 (fourteen hundred two hundred sixty)." Yep, that's what Pacun wrote... I have a very large check to write to the United States Treasury in the next coupla days. Will you help me fill it out?

"If he were not already an LLC or corporation, he would first file 8832 to incorporate...." Please, say it ain't so!!

This reminds me of the time *before computers* when we *typed* our clients' tax returns - it musta been back in .. I'm not going to tell you how long ago it was! - Anyway, our new secretary couldn't find Form 1120 so she took an 1120S and whited out the "S"! Wow! What a return that was! IRS might *still* be scratching their head!! "They are both on paper, and they both start with 1099 [1120], right?" Some things never change...