Understanding the Latest 1031 Exchange Extensions

The California Franchise Tax Board published a news release on April 15, 2020 announcing its extensions for California 1031 exchanges. The Board makes it very clear that California is going to track the federal tax filing and payment extensions exactly. The news release provides that:

For California tax purposes, if a taxpayer’s 1031 like-kind exchange identification period or exchange period is due to expire on or after April 1, 2020, and before July 15, 2020, taxpayer’s identification period and exchange period is extended until July 15, 2020.

Below are a two scenarios provided by the California Franchise Tax Board to help better understand the extensions.

Scenario: The 45-day period to identify a replacement property in an IRC section 1031 like-kind exchange expires on May 1, 2020.  Do I have an extension to July 15, 2020, to identify prospective replacement properties?

According to the California Franchise Tax Board:  Yes, if your 45-day identification period expires between April 1, 2020, and July 15, 2020, you have until July 15, 2020, to identify prospective replacement properties.

Scenario: The period to complete an IRC section 1031 like-kind exchange expires on May 1, 2020.  Do I have an extension to July 15, 2020, to complete the exchange?

According to the California Franchise Tax Board:  Yes, if the period to complete the 1031 exchange (typically a 180-day period) expires between April 1, 2020, and July 15, 2020, you have until July 15, 2020, to complete your exchange transaction.

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