Legal 1031 end of the year update
and December continuing
Education Class Announcement

We hope everyone is enjoying the start to their Holiday Season!
Please find year end updates and announcements below.

1. Complimentary continuing education class

Representing an IRC §1031 Exchange Client
Date: Wednesday, December 15, 2021
Time: 10:00am – 11:45am EST
Earn: 1.5 NY & NJ CLE credits (Attorneys) / 1.5 NY CPE credits (Accountants)
Cost: Free – Open to anyone but only the above will receive credit
Location: Online Webinar
Instructors: James T. Walther, Esq., LL.M. and Matthew K. Scheriff, CPA, CES

2. Legal 1031 company News

We are pleased to announce that Sheila Manni has joined the Legal 1031 Team as a Banking Coordinator and that Erika Baldino has joined the Team as an Exchange Director.

Prior to joining Legal 1031, Sheila worked as a Branch Manager in the Financial and Banking Industries. She brings with her over 30 years of experience. Sheila holds a degree in Science from Queens College and is a licensed as a Notary Public and as a Life & Health Insurance Agent. In addition to her professional skills and experience she brings with her a pleasant and outgoing personality. Sheila will be working out of our Melville, NY office.

Erika Baldino is an Exchange Director for Legal 1031 Exchange Services, LLC, and a Vice President of Business Development for Kensington Vanguard National Land Services. She has been a licensed title producer and Notary Public since 2013 and has closed thousands of residential and commercial title insurance transactions nationally, as well as overseen many IRC §1031 tax deferred exchanges. Erika is a proud ALTA member and has also been recognized as an Emerging Leader in Commercial Real Estate by the Rutgers University Center for Real Estate. Her title expertise has been featured on various podcasts, blogs, and webinars. Erika is based out of Kensington Vanguard’s Parsippany, NJ office.

3. 1031 Tax Reform update – 1031 Exchanges appear to be safe for now!

The Real Estate Industry and investors were able to breathe a sigh of relief as most of the White House and Congress’ proposed changes to the tax code are absent from the 2021 Reconciliation Bill. Notably, there are no changes to Section 1031 and to the step up in basis under Section 1014. We thank those in our network who attended our programs and who joined in our efforts to advocate for the preservation of Section 1031. We also applaud our colleagues in the real estate industry and related industry groups for their lobbying efforts and advocacy to keep Section 1031 in its current form.

Your Ongoing Support is Needed! – In light of the way tax reform was proposed, it is still important to make your voice heard. Let your Congressional representatives know that tax benefits like the 1031 exchange are important to real estate and the broader economy. Please continue to promote awareness of the positive benefits of Section 1031 to your networks of professionals and investors. We will keep you updated on any new developments and webinars.

Links to our recent articles and webinar on 1031 tax reform:

• “Real Estate Breathes a Sigh of Relief …”
• “Senate Vote-A-Rama is a positive for 1031 Exchange Advocates”
• “Real Estate Investing Outlook – A Discussion on the Economy, Tax Reform, and Proposed Limitations for 1031 Exchanges” – June 2021 Webinar – An informative and insightful discussion on the current state of the economy, tax reform proposals, and their implications on Section 1031. Thanks again to Scott Clemons, CFA, for joining us!

Please visit our Tax Reform page for a recording of the webinar.

4. 1031 Exchanges updates

Disaster Relief Update: Tax Relief for taxpayers located in certain areas of NY, NJ, CT, MS, LA, and PA due to the damage from Hurricane Ida and related storms. This includes the extension of 1031 exchange deadlines for “affected taxpayers” that fall within the disaster periods specified in IRS Relief Notices. Our most recent Update is on our website.

Please always check the IRS Disaster Relief Website for updated guidance on disasters.

• Also note that Tax Relief for those affected by the California Wildfires was further extended to January 3rd for deadlines that were originally extended to November 15, 2021,See IR-2021-224, Nov. 15, 2021

• For background, please see our past article on Hurricane Ida and Fall 2021 disasters

If you are transacting a 1031 exchange and believe that you are eligible for relief, please consult with your tax advisors and/or QI to make determinations accordingly.

State Law Update: Is it possible that Pennsylvania taxpayers will be able to utilize 1031 exchanges in 2022? Currently, Pennsylvania is the only state that doesn’t conform to IRC 1031 for its individual income tax. The Pennsylvania Senate recently approved and advanced the Small Business Tax Reform package which seeks to conform Pennsylvania’s tax code to several provisions of the federal tax code – S.B. 347 “like kind exchanges”; S.B. 348 “Net Operating Loss Deductions”; and S.B. 349 “§179 Expensing.” Conforming these provisions to the federal tax code would help provide better tax benefits to small businesses operating in PA. Reciprocal legislation must now be passed by the Pennsylvania House of Representatives and signed into law by the governor to take effect.

Additional Background

• Previous 2021 article – Pennsylvania Moves the Ball Forward…

In a recent Pennsylvania Commonwealth Court decision, Pearlstein v. Commonwealth, 2021 Pa. Commw. LEXIS 580 (December 2, 2021) the Court reiterated that tax deferred treatment under IRC 1031 is not recognized for Pennsylvania Personal Income Tax (“PIT”) purposes. The Commonwealth Court affirmed the state Board of Finance and Revenue’s position that it will not accept GAAP accounting and federal tax deferral principles for its PIT. See also Slogoff v. Commonwealth, 2021 Pa. Commw. Unpub. LEXIS 603 (December 2, 2021)

Warm wishes for a Happy and Healthy Holiday Season!
The Legal 1031 Team

Legal 1031 does not provide tax or legal advice, nor can we make any representations or warranties regarding the tax consequences of any transaction. Taxpayers must consult their tax and/or legal advisors for this information. Unless otherwise expressly indicated, any perceived federal tax advice contained in this article/communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.
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