Some people that sell insurance slip into the vernacular of 1035 exchanges, which is the simultaneous swapping of insurance products. Back in the day, the 1031 provision was very similar to the 1035 provision. It was thought that the exchange had to be simultaneous, just like old fashioned horse swaps.
A man named T.J. Starker changed all that. T.J. was a lumber baron in Oregon who, back in the 1970s, wanted to sell his lumber holdings but couldn’t find any replacements that suited him at the time. So he decided to make a deal with the purchaser and conveyed his lumber holdings to the purchaser in exchange for replacement property that he designated in the years to come. Essentially, he concocted the first non-simultaneous 1031 exchange.
The IRS did not like this at all. They sued and the case went all the way to the US Supreme Court. T.J. eventually won on a procedural argument. As a result, T.J. Starker’s name has been intertwined with the 1031 exchange ever since. Many people colloquially refer to 1031 exchanges as Starker exchanges.
Consider the Benefits of a Like-Kind Exchange
When you’re thinking about selling a piece of investment real estate, it’s important to consider the many benefits of a like-kind exchange. Rather than selling your property and getting hit with a capital gains tax bill, you may be able to defer your capital gains taxes by reinvesting the net proceeds into a replacement property of equal or greater value. This is the primary benefit of section 1031 and it can be utilized by any United States taxpayer. Reach out to a qualified intermediary to learn more about how a 1031 exchange can save you money today.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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