IRS Provides Safe Harbor for Like-Kind Exchanges Not Completed Because of Defaulting Qualified Intermediary
By Friedemann Thomma and Thomas S. Wisialowski
In Revenue Procedure 2010-14 (Rev. Proc. 2010-14), the Internal Revenue Service (the IRS) has granted relief for a taxpayer who was unable to timely complete a like-kind exchange because its qualified intermediary (the QI) entered into bankruptcy or receivership. A taxpayer that meets four requirements set out in Rev. Proc. 2010-14 will recognize gain or loss only upon the disposition of the relinquished property using a gross profit ratio method and only when payment is received.