IRS Publication 544 — Sales and Other Dispositions of Assets
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“Section 1250 Property Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable on the property. T o determine the ad- ditional depreciation on section 1250 property, see Addi- tional Depreciation, later.”
for “50%”) as a person that has provided investment banking or brokerage services to the taxpayer within the 2 -year period ending on the date of the transfer of the first of the relinquished properties. For this purpose, a bank affiliate is a corporation whose principal activity is rendering services to facilitate exchanges of property intended to qualify for nonrecognition of gain under section 1031 of the Internal Revenue Code and all of whose stock is owned by either a bank or a bank-holding company. Safe Harbors Against Actual and Constructive Receipt in Deferred Exchanges The following arrangements will not result in actual or constructive receipt of money or non -like-kind property in a deferred exchange.
• Security or guarantee arrangements.
• Qualified escrow accounts or qualified trusts.
• Qualified intermediaries.
• Interest or growth factors.
Security or guarantee arrangements. You will not actually or constructively receive money or non -like-kind property before you actually receive the like -kind replacement property just because your transferee’s obligation to transfer the replacement property to you is secured or guaranteed by one or more of the following.
1. A mortgage, deed of trust, or other security interest in property (other than in cash or a cash equivalent).
2. A standby letter of credit that satisfies all the following requirements. a. Not negotiable, whether by the terms of the letter of credit or under applicable local law. b. Not transferable (except together with the evidence of indebtedness that it secures), whether by the terms of the letter of credit or under applicable local law. c. Issued by a bank or other financial institution. d. Serves as a guarantee of the evidence of indebtedness that is secured by the letter of credit. e. May not be drawn on in the absence of a default in the transferee’s obligation to transfer the replacement property to you.
3. A guarantee by a third person.
The protection against actual and constructive receipt ends when you have an immediate ability or unrestricted right to receive money or non -like-kind property under the security or guarantee arrangement.
Qualified escrow account or qualified trust. You will not actually or constructively receive money or non-like-kind property before you actually receive the 20 Chapter 1 Gain or Loss Publication 544 (2025)
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