Follow-up to our earlier question to about 1031. Below is summary of info......
Client sold a property in 2012 and did 1031 exchange. In that exchange they received a property that had a FMV of $925,000. The basis in the like-kind property is $90,475 and the deferred gain was $834,525
This property was sold on 8/10/15 for $2,742,115. The proceeds were broken down as follows:
-cash received in 2015 was $492,115
-Amount given to intermediary in 2015 was $2,250,000
On 12/29/15 like-kind property was purchased for $1,000,000 leaving a balance held by intermediary as of 12/31/15 of $1,250,000. In 2016 client’s purchase of additional property fell thru.
In 2016 client received remaining $1,250,000 cash held by intermediary
In 2015 we will be picking up a 1231 gain for $492,115
Question
1) What is the gain which should be picked up in 2016? Should this gain be categorized as ordinary or section 1231?
2) What is the basis of the like-kind property with FMV of $1,000,000 which was purchased on 12/29/15? Does $90,475 basis from 2012 like-kind exchange get included in this new property’s basis?
Thanks in advance for help with this issue.
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Jay Gordon
SHELDON GORDON, CPA
Lynbrook NY
lynbrookcpas@gmail.com516-593-5633
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