Last Minute IRS Disaster Relief Updates For CA 1031

Today, our 1031 trade association, the FEA (Federation of Exchange Accommodators) stated:

The IRS further postponed the 10/16/2023 tax deadlines for most of California to 11/16/23. This surprise announcement was made by the IRS on the afternoon of 10/16/23. The postponement should include 45-day and 180-day deadlines for Section 1031. The IRS notice states that “time-sensitive tax-related actions also qualify for the extra time”.

There are several other ongoing postponements for areas in Florida, South Carolina, Georgia, Massachusetts, Maine, Louisiana, Hawaii, Alaska, Illinois, and Vermont. You should check the IRS disaster relief webpage for the Covered Disaster Areas, Disaster Dates and General Postponement dates.

An “Affected Taxpayer” includes individuals who live, and businesses whose principal place of business is located in, the Covered Disaster Area. Affected Taxpayers are entitled to relief regardless of where the Relinquished Property or Replacement Property is located. Affected Taxpayers may choose either the General Postponement relief under Section 6 OR the Alternative relief under Section 17 of Rev. Proc. 2018-58. Taxpayers who do not meet the definition of Affected Taxpayers do not qualify for Section 6 General Postponement relief.

Option One: General Postponement under Section 6 of Rev. Proc. 2018-58 (Affected Taxpayers only). Any 45-day deadline or 180-day deadline (for either a forward or reverse exchange) that falls on or after the Disaster Date is postponed to the General Postponement Date. The General Postponement applies regardless of the date the Relinquished Property was transferred (or the parked property acquired by the EAT) and is available to Affected Taxpayers regardless of whether their exchange began before or after the Disaster Date.

Option Two: Section 17 Alternative (Available to (1) Affected Taxpayers and (2) other taxpayers who have difficulty meeting the exchange deadlines. See Rev. Proc. 2018-58, Section 17 for conditions constituting “difficulty”). Option Two is only available if the relinquished property was transferred (or the parked property was acquired by the EAT) on or before the Disaster Date. Any 45-day or 180-day deadline that falls on or after the Disaster Date is extended to THE LONGER OF: (1) 120 days from such deadline; OR (2) the General Postponement Date.

Please see Revenue Procedure 2018-58, Section 17, and the Notices shown on https://www.irs.gov/newsroom/tax-relief-in-disaster-situations.

As always, exchangers should speak with their tax advisors to determine if they are eligible for an extension and if so, what their new time deadlines are.