December, 2005--Sacramento, California--The California Franchise Tax Board placed Tax-Deferred Like-Kind Exchanges pursuant to Section 1031 of the Internal Revenue Code on its Top Audit Issues List according to its November/December Edition of Tax News.
The FTB stated that "The sale of property through an IRC §1031 exchange raises questions regarding basis calculation, timing and related party transactions. Taxpayers continue to report transactions as IRC §1031 exchanges that do not meet such basic code requirements as items exchanged must be similar and adhere to the transaction’s timing, and the basis must be correctly calculated."
"It would appear that the California FTB intends to gear up and focus more audit resources on tax-deferred exchange transactons in order to curb certain types of abuse such as identification of replacement properties (timing), calculation of cost basis in properties, and related party transaction issues," stated William L. Exeter, president and chief executive officer, Exeter 1031 Exchange Services, LLC.
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Exeter 1031 Exchange Services, LLC is a leading national provider of Qualified Intermediary, Exchange Accommodation Titleholding, and Advisory services for tax-deferred like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code. Exeter 1031 Exchange Services, LLC administers all types of tax-deferred like-kind exchange transactions, including forward, reverse and improvement (build-to-suit or construction) 1031 exchange structures, in all 50 states. Exeter 1031 Exchange Services, LLC currently has national office locations in San Diego, Irvine, Fresno, and San Francisco, California and Winston-Salem, North Carolina.