Complex Like-Kind Exchange of Real Estate

Summary: Our clients closed the sale of a valuable tract of undeveloped land late in the year. The income tax liability on their profit from the sale would have been in the millions of dollars. The clients approached us early in the New Year, seeking our review of new investment possibilities, analysis of tax issues and assistance with reinvestment, all in accordance with the strict timing rules for tax-qualified like-kind exchanges. We did a preliminary review of the tax compliance issues involved and met with the client.  We then negotiated modifications of the investment documents and terms to address both tax compliance and economic issues to protect the client’s overall financial situation.

Result: The clients were able to identify and quickly analyze a replacement property and close on the reinvestment within the timelines specified in the Internal Revenue Code, qualifying them for tax deferred treatment. The new productive property was expected to yield immediate operating cash flow.

Attorneys: Thomas A. Maier, Jamie L. Dupree