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Tax-Scholar
Tax-Scholar, CPA
Category: Tax
Satisfied Customers: 89
Experience:  Helping customers comply with and plan for income taxes
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HAVE A S CORPORATION THAT SOLD A APARTMENT BUILDING IN NYC

Customer Question

HAVE A S CORPORATION THAT SOLD A APARTMENT BUILDING IN NYC FOR A LARGE GAIN. PURCHASED ANOTHER
RENTAL IN A SECTION 1031 EXCHANGE AND NEED SOME HELP IN ACCOUNTING FOR IT
Submitted: 9 months ago.
Category: Tax
Expert:  Jonathan Tierney replied 9 months ago.

Hi, my name is ***** ***** I can help. What exactly is your problem accounting for the IRC 1031 exchange?

Customer: replied 9 months ago.
i sold a apartment building for approximately 2.3 million dollars. I netted after expenses 2.1 million. I took 650k and purchased
another rental (1031 like kind exchange) My questions are as follows: How to i account for the sales on my books regarding book value and depreciation / accumulated depreciation recaptured on building sold and also how will i account for the purchase of the new apartment. Do i pay tax on the boot amount (amount received ) or on the difference between the sale price and my basis of the property?
Customer: replied 9 months ago.
should i have received a 1099 s on this transaction ????
Customer: replied 9 months ago.
my basis in the property sold was approximately 120k with 51K in accumulated depreciation
Customer: replied 9 months ago.
is anyone there?
Expert:  Jonathan Tierney replied 9 months ago.

Did you use a qualified intermediary to handle the 1031 exchange?

Expert:  Jonathan Tierney replied 9 months ago.

If this is treated as a 1031 exchange you have to recognize a $1,381,000 long-term capital gain. In addition, your basis in the replacement property would be same as the previous property of $120K less $51K in depreciation, or $69K

Expert:  Jonathan Tierney replied 9 months ago.

You normally would have received a 1099-S, but since the property is being held by a corporation, you would not receive one. Corporations are generally exempt from receiving 1099 forms.

Customer: replied 9 months ago.
I sold my apartment building for $2.3 million and netted $2.1 after closing cost. I took 600k and purchased a new condo which I have rented out and qualified for a 1031 exchange. I had a intermediary handle the transaction within the required time frame. There was no liability outstanding on the building. The asset was part of a S corporation located in NYC.I have additional income of approximated 20k from the s corp. I have made estimated tax payments to
the NYC general corporation tax and personal estimated tax payments both federal and state based on a gain of $1,552,000The sale of the apartment building took place on February 2015 and the like kind exchange took place within the required time frame (July 2015) From the proceeds of the sale $600k was sent to
the intermediary to purchase the new property.I am trying to record the transactions on my books and have done the following which I feel is incorrect When I run my tax software it tell me that my gain is different than what I have booked stating that it is
the amount of cash I received $1,552,000 or boot.Cash received on sale less the amount held by intermediary:
cash 1,552,000
accum dep 51,000
building 171,000
land 5,000
gain on sale???? 1,427,000The new section 1031 asset
Condo 600,000
Paid in Cap ?? 600,000this is how I handled the monies that were transferred directly from the firm handling the 1031 which I never saw or received.How do I reconcile the difference in my retain earnings account from tax to books or what am I missing??? What am I missing or not seeing????????????
Expert:  Tax-Scholar replied 9 months ago.

Hi Greg - The 1031 transaction is often times complex and there are nuances. I would recommend working in a qualified CPA to properly report this transaction. It looks like you are missing a deferred gain account. Also the the second entry would not go against paid in capital. This should reduce the 1.4 Mill gain. It is going to be hard to get all this right just asking questions on this platform.