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Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 286
Experience:  Director of Advisory & Assurance
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Does anyone know how to do 1033 tax exchange? Thank you.

Customer Question

Does anyone know how to do 1033 tax exchange?Thank you.Gloria
Submitted: 4 months ago.
Category: Finance
Expert:  Matthew Breecher replied 4 months ago.

Hello, I would like to assist you as I have experience with involuntary conversions.

Customer: replied 4 months ago.
do you know how I start?
Expert:  Matthew Breecher replied 4 months ago.

When did the event take place? What is the nature of the conversion? What is the expected gain? And, do you think they will have the replacement asset in 2 years?

Customer: replied 4 months ago.
The highway administration asked me to sign an agreement last year. However, I haven't gotten the money yet. the highway administration need my house for the metro. the gain is about $30,000. I will buy another one in 2 years.
Expert:  Matthew Breecher replied 4 months ago.

Is this a personal house? 1033 is designed for business/investment assets. On a personal home, you are exempt on the first $250,000 gain as an individual or $500,000 married.

Customer: replied 4 months ago.
It is a rental property.
Expert:  Matthew Breecher replied 4 months ago.

In that case, you should have the conversion and the payment in the same year. A critical factor will be identifying the new property timely. If a taxpayer designates qualified replacement property on a return within the required period and purchases the property at the anticipated price within two years of the end of the gain year (three years—if section 1033(g) applies), a valid election is complete.


If the purchase price is lower than anticipated, resulting in additional gain, taxpayers should report this income by amending the gain(election)-year return. Taxpayers aren’t required to designate replacement property on the election-year return as long as they do so on the replacement-year return and acquire the property within the statutory time constraints. If the taxpayer does not purchase qualifying replacement property within the required two- or three-year window, it must amend the gain-year return to report the gain.

Expert:  Matthew Breecher replied 4 months ago.

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