If the property is contributed to an exiting REIT in exchange for UPREIT units under IRC 721 and if the REIT already has multiple properties in multiple states and if it will continue to acquire additional properties it would be cumbersome to list properties owned by the REIT year after year on an annual FTB 3840 so it would make sense to continue to report the allocated deferred gain of the property on FTB 3840 until the UPREIT units received in exchange for the contributed property have been sold at which time both the federal and California taxes would be due on the allocated deferred gain of the original Like-Kind exchanged property.
