The Wheels of Justice Move Slowly In Tax Court

For anyone who has ever had to deal with the stress of a lawsuit, it may seem like it takes an eternity to finalize the matter. In some cases, years and years. But how about 15 years?

The recently decided case of Estate of George H. Bartell v. Commissioner, 147 T.C. No. 5 (August 10, 2016) is one such matter. This US Tax Court matter involved a somewhat complex set of real estate transactions that eventually involved a 1031 exchange.

The IRS originally sought to deny the exchange on the grounds that the exchanger received the benefits and burdens of ownership on the replacement property prior to selling the relinquished property. The tax court disagreed and allowed the exchange for federal tax purposes.

Read full details and an explanation of the case here.

Of course, exchangors should note that the case itself was litigated without benefit of Revenue Procedure 2000-37, which sets forth rigid guidelines for so-called “reverse exchanges.” A similar transaction today would be subject to these guidelines, so anyone contemplating a reverse exchange would do well to consult with their tax and legal advisors to fully understand their responsibilities during the transactions.

To find out how we can help you find and close on your next 1031 exchange property or to learn more about the exchange process and our qualified intermediary services, please visit our website.