Federal Tax

1031 Exchange - Expense Question

  • 1.  1031 Exchange - Expense Question

    Posted 09-28-2017 04:47 PM
    I'm going back and forth with NYS on an audit for a 1031 exchange.

    The scenario is:

    Taxpayer pays his exchange lawyer from his own funds to design the exchange, select and evaluate properties, all legitimately paid over the course of a year prior to the exchange.

    In the exchange, various properties were purchased in other states in which the taxpayer needed researched as he has no business in those states.

    NYS audited the tax return and the auditor wants to disallow the total of all legal expenses claimed.

    All the bills specify the reason for billing: exchange related consultation & evaluation of various properties. Those properties researched were the ones purchased in the exchange.

    I have explained and detailed this to the auditor but he's still being difficult about accepting these legal fees, claiming they should have been escrowed in exchange.

    Has anyone experienced any scenario like this? Any pointers? Thanks in advance!

    ------------------------------
    Gus Hatzistefanidis
    CPA
    KONSTANTINOS HATZISTEFANIDIS, CPA
    Astoria NY
    ------------------------------


Discussion Disclaimer

The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.