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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4623
Experience:  35 years tax experience, including four years at a Big 4 firm.
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How do i record a 1031 exchange with cash, I sold a business

Customer Question

how do i record a 1031 exchange with cash
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I sold a business and bought the type of business in another location. In the first transaction a 1031 Exchange account secured by a third party and appropriately designated to the new business within the 45 day time limit.
JA: Is there anything else important you think the Accountant should know?
Customer: Yes. How do i record the first transaction that included cash received?
Submitted: 11 months ago.
Category: Tax
Expert:  PDtax replied 11 months ago.

Hi from Just Answer. I'mCustomer and can assist.

Expert:  PDtax replied 11 months ago.

The 1031 exchange is typically tax deferred, except for the receipt of cash (boot).

If you exchange a property for another and boot, expect to report taxable gain for the full amount of the boot, then the new property gets carryover basis of the old property.

Please advise if you need anything more. If this addresses your question, please rate my assistance using the rating scale. Positive feedback is appreciated. I'mCustomer

Customer: replied 11 months ago.
Thank you. I understand that the exchange is tax deferred and gets carryover basis. Can you give me an example of how this would be recorded in a journal entry from a HUD-1 statement in the first transaction where the business is sold and cash is received and a 1031 exchange is secured or earmarked for the second transaction. Thank you for all of your help
Expert:  PDtax replied 11 months ago.

I can work this up for you, but the exercise will take some time, and I will have to ask for a price bump to assist. If you have the closing statements, I will put together the accounting entry.
Accepting my Offer will set up a private link where I can provide my business email to send and receive your document and entry.