1031 exchange of LLC Interest

Dear 1031x: Comments: I am receiving proceeds of $35,000 next week from the sale of my membership in a privately held LLC that owns a office building. About $33,000 is capital gain. Can I use a 1031 exchange to invest this money in a single family rental property that I plan to buy in the next 45 days?

Dear M: I believe that you are describing a real estate sale by an LLC in which you hold a membership interest followed by a distribution of proceeds to the members. This will not qualify for 1031 exchange. That is why I do not recommend ownership of real estate in an LLC with many members. Instead I recommend that each investor form their own single member LLC and that the several LLCs own the real estate as tenants in common. Then, when the real estate sells, each LLC can decide whether to 1031x or not
Sincerely,
Steven W. Hickox, Attorney & President
www.1031x.com
1-888-899-1031