IRS Extends Deadlines for Section 1031 Like-Kind Exchanges and Qualified Opportunity Zone Investments

22 April 2020 Coronavirus Resource Center:Back to Business Blog
Author(s): Timothy L. Voigtman Nicole Paterson

The IRS extended the timelines for certain taxpayers engaging in Section 1031 like-kind exchanges or making investments in Qualified Opportunity Zone Funds. The IRS extensions only apply to deadlines that fall between April 1, 2020 and July 15, 2020.

Section 1031 Exchanges:  Under Notice 2020-23, taxpayers in the process of a section 1031 like-kind exchange may have additional time to identify and acquire suitable replacement property. If a taxpayer’s 45-day Identification Period or 180-day Exchange Period falls between April 1, 2020 and July 15, 2020, the applicable period is automatically extended to July 15, 2020. The guidance provides no insight as to whether a taxpayer must wait to receive funds until July 15, 2020 in the event no property was identified during the 45-day Identification Period ending in the applicable period.

Similarly, taxpayers engaged in reverse or improvement exchanges, pursuant to Revenue Procedure 2000-37, are also eligible for the automatic deadline extension to July 15, 2020 for deadlines that fall between April 1, 2020 and July 15, 2020.

Qualified Opportunity Zone Funds:  Additionally, taxpayers who recently sold property may have additional time to reinvest the proceeds into Qualified Opportunity Zone Funds. If a taxpayer’s 180-day reinvestment period ends between April 1, 2020 and July 15, 2020, the deadline to reinvest the sale proceeds into a Qualified Opportunity Zone Fund is automatically extended to July 15, 2020.

For deadlines that are outside of those dates, the standard rules continue to apply and no relief is available.  At this time, there is no retroactive effect if the relevant actions were due before April 1, 2020.s

The full text of IRS Notice 2020-23, which amplifies Notice 2020-18 and Notice 2020-20, is available here.

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