“On April 9th the IRS extended deadlines for the identification and purchase of properties in like-kind exchanges in response to the novel coronavirus pandemic. It is unclear whether the deadlines for the 45 day identification and 180 day acquisition periods are extended until July 15th or for an extra 120 days (which is the historically issued extension period of time). A conservative interpretation is that both dates are extended only until July 15th. Additionally, the extensions only apply to deadlines originally falling between April 1 and July 15, 2020. In the past the IRS has used the date of emergency declarations, which, in this case, is March 13th.
A coalition of 19 real estate organizations, including the Federation of Exchange Accommodators (FEA), submitted a letter today to Treasury Secretary Mnuchin and other members of Treasury and IRS. The letter thanked the Administration for the disaster relief granted on April 9 in Notice 2020-23, but requested further clarification.
Specifically, the coalition requested the following clarifications:
- That the 120 day deadline postponements provided in Rev. Proc. 2018-58 Section 17 would be included in the relief granted in Notice 2020-23;
- That March 13, 2020, the date the President issued the Stafford Act emergency declaration related to the COVID-19 pandemic, be deemed to be the beginning date of the disaster period;
- That each day between March 13 and July 15, 2020 be deemed to be a separate date of the federally declared disaster for purposes of relief for like-kind exchanges under Rev. Proc. 2018-58;
- That a taxpayer that qualifies for postponement of either the 45-day or 180-day deadlines within the disaster period would receive postponements for both deadlines;
- That the relief is automatic, but not mandatory. Qualifying taxpayer’s won’t have to do anything to receive the postponements, but they could elect out of the disaster relief and rely upon their original exchange deadlines.
These clarifications would provide much needed relief to our clients and other taxpayers engaged in like-kind exchanges which include large companies, small businesses and middle-class individuals. During this time of unprecedented uncertainty, taxpayers need the confidence of knowing that they will have enough time to successfully complete their real estate exchanges.
We are proud that our IPX1031® General Counsel, Suzanne Goldstein Baker, is one of the principal authors of this letter. Suzanne is also one of the co-chairs of the FEA Government Affairs Committee.
IRS Disaster Relief Updates
As always, exchangers should speak with their tax advisors to determine if they are eligible for an extension.
This remains a fluid situation and we will provide any clarification or changes that the IRS issues, if any.
Read more about disaster relief here: IPX1031 Disaster Relief Deadline Extensions information and IRS Disaster Relief Notices