Topic Thread

1.  Deferred Gain on 1031 Transaction-NYC

Posted 09-12-2017 12:05
A prospective client had a question.  They are a NYC S Corp. They did a 1031 exchange in 2015 which resulted in a sizable deferred gain. The new property is located in Texas.  They want to close the NYC S Corp and become a Texas Corp.  How will NYC treat this?  Can they wait until they sell the property to pay the deferred tax to NYC or will NYC want their money at the time the NYC corp is closed?

Thanks in advance for any advice.

Jay Gordon
Lynbrook NY

2.  RE: Deferred Gain on 1031 Transaction-NYC

Posted 09-13-2017 07:24
I seem to recall a quirk in NYC tax law whereby in a situation such as you describe, the City may NEVER get the tax on the 1031 gain.  Some states tax the gain immediately when the replacement property is out of state and some have other variations.  I think NYC follows the federal law in deferring the gain at the time of the exchange and then will never get the tax down the road as there would no longer be NY tax returns filed since there is no longer NY source income. Look into this further rather than assume that logic dictates here.

Lawrence Prosky
Garden City NY