Can a Taxpayer Purchase a Replacement Property in a single-member limited liability company that is disregard for federal tax purposes?
Yes. If the same taxpayer that held title to the old Relinquished Property also owns 100% of the membership interest in the LLC, then you may take title to your new replacement property through a single member LLC that is disregarded as an entity separate from its owner (unless it elects to be taxed as an association / corporation). Reg Section 301.7701-2 and 3. The sole owner of a limited liability company which is disregarded for tax purposes is in the same position economically as if he/she had taken title in his/her own individual name.
Revocable Living Trust or Grantor Trust
For estate planning purposes a taxpayer may wish to take title to the replacement property in the name of his, her, or their revocable living trust. Or they may hold the relinquished property in a revocable living trust or other grantor trust and wish to hold the replacement property outside the trust. In either case, exchange tax deferment under IRC Section 1031 will be permitted. The trust is a disregarded entity and the taxpayer will file a single return using his own tax identification number, and not file a separate return for the trust.
1031 Exchanges in Minnesota
If you have questions about this or anything else relating to 1031 exchanges, reach out to our qualified intermediaries today! We have over two decades of experience in the 1031 exchange industry and can answer any questions you might have. Contact us today at our downtown Minneapolis office to learn more!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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