Exchanging Thoughts

California Drop and Swap: Substance Over Form

Posted by Laura Markham, JD on Fri, Apr 24, 2020

The Internal Revenue Code (IRC) section 1031 requires that the same taxpayer who relinquished property also take ownership of replacement property in a like kind exchange. Partnerships, corporations, LLCs, and all their various structures (hereafter “structure/entity”) are considered an individual “taxpayer” in the eyes of the IRC; not the individual members, shareholders, partners, etc. (collectively “members/partners”).

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Topics: 1031 exchange rules, Drop & Swap, Partnerships