When is a Failed 1031 Exchange Taxable?

Yesterday I was discussing when a taxpayer would have the right to his or her 1031 exchange funds once his or her 1031 exchange fails. It is a very complex and frustrating situation to find yourself.

However, there might be a small bright spot even when your 1031 exchange has failed and becomes a taxable event.

The issues discussed yesterday outlined the circumstances under which the taxpayer would have access to his or her 1031 exchange funds when a 1031 exchange transaction falls apart.

The point in time that the taxpayer has the right to receive their funds from the 1031 exchange qualified intermediary when the 1031 exchange will determine the year in which the failed 1031 exchange will be taxable.

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