1031s And IRS Audits
Any stats out there on whether or not tax returns with 1031 exchanges are audited any more than your run of the mill tax return?
As I recall an individuals odds of an IRS audit are in the 1 in 1000 range.
If the 1031 is done correctly it should not raise any red flags on your return.
Highlife, what are you hiding, exactly? Hahahahahahaa! Z
Wanting the statistics of being audited does not necessarily mean that someone is hiding something. There are things that create red flags and things that don't. REI creates some fairly intricate tax senarios so if there is a way to avoid being audited, all the better.
GOOD LUCK
Oh, I agree, where is your sense of humor, myfrogger? Do you really think I want an audit? Believe me I don't. Not that I have anything to hide either, it''s just the inconvienience if it all. And I really don't feel like going through all of those receipts again. Z
Quote:
On 2004-04-12 02:43, Zach wrote:
Highlife, what are you hiding, exactly? Hahahahahahaa! Z
Now now, nothing to hide.
I primarily do 1031 exxchanges. I have been audited in the past primarily for business expenses as they pertain to REI. My 1031 exchanges have never been questioned.
I usually have to use a Accommodator to complete my exchange. My agreements with them is they keep all the interest earned, but lower their fixed fee. This keeps IRS from assuming I have control of the cash.
Quote:I usually have to use a Accommodator to complete my exchange. My agreements with them is they keep all the interest earned, but lower their fixed fee. This keeps IRS from assuming I have control of the cash.You must use a qualified intermediary in a qualified deferred exchange. You are entitled to any interest earned on your escrowed funds. Earning interest does not suggest control of the cash.
My escrow exchange agent's fee is usually paid by the amount of interest earned by my escrow deposit. I get a 1099 at the end of the year showing how much interest was earned. Interest is reported on Schedule B.
Doing a 1031 Exchange does not raise any red flags or create a higher degree of audit risk. I have been a qualified intermediary since 1986 and have done in excess of 50,000 exchanges and percentage wise have seen very few audit issues pop up. The IRS is beginning to address certain industry abuses by amending its form 8824. But, there is no increased risk of audit because of an exchange.