As we recently reported, on April 9, 2020, the IRS published Notice 2020-23 (the “Notice”), which extends certain Section 1031 time periods. The Notice states that Section 1031 45-day identification and 180-day acquisition deadlines that fall on or after April 1 can be extended to July 15. Deadlines that took place prior to April 1, or are scheduled for after July 15, appear unaffected by the Notice at this time.

On April 20, 2020, the Federation of Exchange Accommodators (“FEA”) joined a group of 19 real estate industry associations in a letter to the Treasury Department and the IRS seeking relief and requesting clarification with respect to like-kind exchanges. Specifically, the letter sought to clarify the interplay between the Notice and traditional Section 1031 disaster relief procedures outlined in Section 17 of Revenue Procedure 2018-58 (“Section 17”). Further, the associations requested that March 13, as opposed to April 1, be designated as the beginning date of disaster relief under Section 17, that each day of the disaster period from March 13 to July 15 be treated as the date of the federally declared disaster, and that taxpayers with one like-kind exchange deadline falling within the disaster period be permitted to an extension of both deadlines. The letter and related commentary can be found here.

What this Means for Exchangers
It is our current understanding the extensions permitted in the Notice are intended as relief to taxpayers, and are not meant to penalize. A conservative interpretation of the Notice grants relief only to exchangers with deadlines falling between April 1 and July 15, and extends only such deadlines until July 15 with no effect on any other part of the exchange. Different interpretations exist, however, and are worthy of consideration. A broader interpretation of the Notice would permit taxpayers with exchanges the option of taking advantage of either the deadline extensions in the Notice or the deadline extensions provided in Section 17. In many situations, Section 17 extensions would be more favorable to the taxpayer. Interpreting Section 17 to be available under the Notice would potentially provide the following:

If an exchange began on or before April 1 and your 45-day identification deadline falls on or after April 1, then your identification and acquisition deadlines may be extended for a period of 120 days; If an exchange began on or before April 1 and your 180-day acquisition deadline falls on or after April 1, then your acquisition deadline may be extended for a period of 120 days.

Important Note: Exchanges need to be completed before the due date of the exchanger’s tax return, including extensions.
The IRS may provide guidance on these differing interpretations, and the other issues outlined above, in the form of an FAQ. If or when the FAQ is issued, however, remains unknown.

IPE 1031 Is Ready to Serve as Your Section 1031 Exchange Resource

IPE 1031 will continue to closely monitor any developments related to or concerning these issues and advise when appropriate. If you need a personal exchange consultation, we are happy to schedule a conference call at a time that works with your schedule and situation. If you have an ongoing exchange, our team members are here to assist you with finding the answers to your questions. IPE 1031 and all of its team members can be contacted via phone, email, or our website. General inquiries to IPE 1031 can be made at [email protected] and additional contact information can be found at our website: