1031 Exchange Questions
I believe I will be initiating a 1031 Exchange on behalf of my client soon (offer is submitted on Upleg), and I wanted to get some clarification on two questions:
QUESTION ONE:
She is low on cash for reserves in her bank account, so she will need some passthrough money from the buyer of her downlegs (she needs reserves in bank for loan on new upleg).
Does this passthrough need to be first transferred from escrow to an intermediary account then her bank, or could it be transferred to her bank from escrow (skip 1031 intermediary account)? This will be boot/a taxable event, but I am trying to make sure that doesn’t ruin the whole exchange and that she can still proceed with an exchange with the remainder of the proceeds. I want to make sure any transfers don’t mess the whole exchange up.
QUESTION TWO:
She has three properties under contract that are her downlegs. One property is in an LLC, another under her name with no middle initial, and another under her name with middle initial. All three are solely owned by her.
Does she need to put the one or two uplegs she's getting under an LLC? Can she facilitate this transaction under herself or any entity because she's the sole owner and taxpayer? Summed up, she owns all three by herself, she wants to exchange into 1-to-2 uplegs – as long as she's sole owner on downlegs and uplegs, doesn't matter?
Thank you very much for your expertise.