Like-Kind Exchange Deadlines That Fall on Weekends and Holidays

Abstract

Section 1031 identification periods and exchange periods have almost a 30-percent chance of ending on a weekend or holiday. In practice, most exchanges close before the last day of the exchange period, and cautious exchangers will identify replacement property before the last day of the identification period.
Nonetheless, from time to time, exchangers find themselves with an unachievable deadline that falls on a weekend or holiday and they are left to wonder if they can qualify for section 1031 nonrecognition if they complete the identification or exchange on the next business day. Like-Kind Exchange Deadlines That Fall on Weekends and Holidays, at the link below, examines section 7503, which extends deadlines that fall on weekends and holidays, reviews the IRS position regarding such deadlines, and presents the case law that has considered the IRS position. The article concludes that courts would likely follow their precedent and apply section 7503 to section 1031 deadlines. The article most definitely does not advocate waiting until the last minute to identify or acquire replacement property. For those exchangers who have no alternative, however, they may look to the section 7503 and case law when deciding whether to identify or acquire replacement property on the first business day following a weekend or holiday deadline and report the transaction as a valid section 1031 exchange.

Keywords: section 1031, tenancy-in-common, drop-and-swap, qualified-use requirement, investment purpose, held for productive use in a trade or business