Revenue Procedure 2014-3

Section 4.01(43) of recently released Revenue Procedure 2014-3 provided special rules for exchanges between related persons.  It provides two exceptions when a related party exchange is acceptable assuming all other Section 1031 requirements are satisfied:

  1. a transaction involving an exchange of undivided interests in different properties that results in each taxpayer holding either the entire interest in a single property or a larger undivided interest in any of the properties; or
  2. a disposition of property in a nonrecognition transaction, whether an exchange described in Section 1031(f) involving related parties, or a subsequent disposition of property involved in the exchange, has as one of its principal purposes the avoidance of Federal income tax, or is part of a transaction (or series of transactions) structured to avoid the purposes of Section 1031(f).

Click here to read Revenue Procedure 1014-3