1031 exchange:
Tobacco Allotments
Things
You Need to Know About 1031 Exchanges of Tobacco Allotments:
- Your tobacco allotment buyout is a taxable event; however,
- Your tabacco allotment buyout qualifies for a tax deferral under IRC Section 1031,
IF YOU ACT NOW! - You can use your tobacco allotment buyout to purchase other investment real estate without tax liability, IF YOU FOLLOW THE RULES OF IRC SECTION 1031.
- You MUST act prior to SEPTEMBER 16, 2005, at the latest.
- Please contact us if you want to protect your tobacco allotment buyout from immediate taxation.
Other Information:
- The new property must be used for trade, business or investment to qualify. In general, tobacco allotments are treated as like-kind real property under IRC Section 1031.
- You have 45 days from the receipt of the allotment by your 1031 exchange accomodator to identify a list of three properties from which you will purchase.
- You cannot have actual or constructive control of any of the tobacco allotment proceeds. By law, all money is held by a Qualified Intermediary (also referred to as an Accommodator or Facilitator). You cannot have an associate or employee, your attorney, broker or CPA hold the proceeds, nor can you leave the proceeds in escrow until the new property is purchased.
- The titleholder named on the tobacco allotment must be the same titleholder on the new property.
- You must reinvest all cash proceeds from the allotment, and purchase a new property or properties of equal or greater value, in order to avoid taxation on the allotment.
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