A common question many taxpayers have about 1031 exchanges is: “can I do a 1031 exchange involving corporate stock?”
In essence, a corporation may own real estate, but selling the stock of that corporation is not the same thing as selling the real estate. This is an important distinction that can make or break a 1031 exchange.
If the transaction is structured as a “stock sale,” it generally will NOT qualify for 1031 treatment. Stock is specifically excluded from 1031 treatment. If the corporation is selling its assets, like qualifying real property instead, the corporation can complete a 1031 exchange and defer gain, provided the exchange requirements are met. This is often referred to as an “asset sale” as opposed to a stock sale.
If you are considering a sale involving a corporation that owns low basis real estate, this is an important issue to address before the deal is structured, not after.
Here are a few essential considerations when considering 1031 exchanges involving corporations:
1031 applies to qualifying real property
Corporate stock does not qualify
Stocks and securities are exclude
The corporation may be able to exchange the real estate asset
1031 Intermediaries in the Twin Cities
1031 exchanges may seem simple but they can quickly get convoluted. It’s important to have a 1031 intermediary on your team to make sure the process goes as smoothly as possible. CPEC1031, LLC has been working with taxpayers on their 1031 exchanges for the past two decades. We have extensive experience facilitating forward exchanges, reverse exchanges, and build-to-suit exchanges. No matter what type of exchange you’re dealing with or where your property is located, we can help you defer capital gains taxes with a 1031 transaction. Contact us today at our Twin Cities office to learn more!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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