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Form 3840 failure to file assessment

November 18, 2016 • Wanda Holmes • Log In to Post Comments

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Has the FTB been assessing failure to file penalties Form 3840 for 1031 exchange transactions with California property being exchanged with out of state properties sold in 2014?  If the form was not filed in 2014 & 2015 should the CA return be amended to file this form only?

To the best of my knowledge they have not. However, 1031 exchanges is one of the top audit issues so you can expect the FTB will at least look at the return and if there are any potential red flags, you can expect an audit, which could result in an assessment for not filing the form.

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