Audit issues for 1031 exchange - Spidell

Audit issues for 1031 exchange

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Message Board Audit issues for 1031 exchange

This topic contains 3 replies, has 2 voices, and was last updated by Peter Muffoletto 3 months, 2 weeks ago.

  • Author
  • #174669
    Cary Wirth

    are there audit guidelines for the 1031 exchanges for the IRS and FTB that you can provide me so i know what issues to be prepared for when my client is audited for the exchange?

    I’m trying be ahead of the game since Spidell has indicated these exchanges are going to be audited.


  • #174714
    Peter Muffoletto

    make sure that you have the following:

    1. purchase settlement statements if you can obtain them relating to the purchase of the properties sold;
    2. depreciation schedules ( i would prepare separately in Excel or some other data base program ) these should tie into the several years of ownership of the property sold;
    3. selling settlement statements of the property sold;
    4. purchase settlement statement of the replacement property;
    5.  Accomodator’s closing statement;
    6. Accommodator’s 45 day declaration/identification communications.
    7. worksheets supporting the 1031 calculations relating to the sale of the property given up, the property acquired, the basis of the new property indicating the reduction of the basis for the deferred gain.
    8. be sure to have the rental property income and expenses fully documented as auditors tend to look to those entries as well.
  • #174749
    Cary Wirth

    Thanks for the reply Peter. I use Lacerte tax software. it has all the depreciation schedules. i assume that will okay.  i also use Tax Tools and i am logging all entries into the 1031 exchange program.

    Can you be more specific on line 8. this is a B&B. we have income statements for all years.



  • #174750
    Peter Muffoletto

    If you have the rental schedules (P&L) that should be fine for now, but be sure to remind the client that that due to the 1031 the audit chances are higher, therefore they should be sure to maintain the supporting documentation.

    Call me as to Lacerte as i do not want to put into print what my experiences are with their 1031 module.

    818 346-2160