Trademarks/Trade Names Can Qualify for 1031 Tax Deferred Exchange

Great news from the IRS. How many times do you hear that one?

IRS Reverses Its Position
Anyway, the IRS reversed its position on the 1031 tax deferred exchange of trademarks and trade names as to whether or not trademarks and tradenames would qualify for a 1031 tax deferred exchange.

IRS Previously Says No
Previously, the IRS had said no by taking a position in its Technical Advice Memorandum 200602034 (TAM 200602034) that Goodwill in fact DID NOT qualify for 1031 tax deferred exchange treatment. Generally, the IRS had previously taken the position that trademarks and trade names were included in the definition of Goodwill and therefore were excluded from 1031 tax deferred exchange treatment.

IRS Now Says Yes
The Internal Revenue Service just released its Technical Advice Memorandum 200911006 (TAM 200911006) that changes course and takes the position that trademarks and trade names will be considered separate and apart from Goodwill and will now qualify for 1031 tax deferred exchange treatment.

Terrific news, especially for those investors that are selling businesses with trademarks and trade names.