The IRS has issued a disaster relief notice for the state of California relating to the severe winter storms, flooding, and landslides that began January 8, 2023.
Counties in which Affected Taxpayers are entitled to relief: Alameda, Colusa, Contra Costa, El Dorado, Fresno, Glenn, Humboldt, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Tulare, Ventura, Yolo, and Yuba counties.
Affected Taxpayers have the option to choose relief in Section 6 OR Section 17 of Rev. Proc. 2018-58 (but not both):
Section 6 – Pursuant to Section 6, Affected Taxpayers with deadlines falling between 1/8/2023 and 5/15/2023 are extended to 5/15/2023.
Section 17 – Section 17 relief is available to Affected Taxpayers (who did not elect Section 6 remedies) and Non-Affected Taxpayers. Section 17 relief provides that if the relinquished property sold on or before 1/8/2023 the 45 and 180-day deadlines that have not passed can be extended for 120 days or until 5/15/2023 (whichever is later). However, pursuant to section 17.02 of Revenue Procedure 2018-58, the postponement period may not extend beyond the due date (including extensions) of the taxpayer’s tax return. This would apply to RQ sales that took place in 2022.
As always, exchangers should speak with their tax advisors to determine if they are eligible for an extension and if so, what their new time deadlines are. Link to the IRS Disaster Relief Notice can be found here.
If you or someone you know has questions about the 1031 exchange process, we at Peak 1031 Exchange are your qualified experts who are here to help. Contact us today at [email protected] or by calling us at 866-357-1031 to discuss the deferral of capital gains taxes with a 1031 exchange.