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Level 2
posted Mar 12, 2022 10:44:32 AM

1031 Exchange: Cash received in section of different property received

I got confused when entering the data into the section "different property received" of 8824 (Federal Taxes -> Business Items --> select "any additional like-kind exchanges", then step by step to the section "different property received", OR in the form mode: line L of first smart work sheet of 8824). Originally in the field "cash received", I entered the amount of the fund which went to my exchange account (which is proceeds from selling my old property). The amount basically is selling price - loan balance paid off at closing of the old property - closing cost. However this calculated a recognized gain amount and 0 deferred gains. 

 

Then I started research why and found a site for instruction to fill out 8824. I followed their steps and calculated a much different recognized gain amount and positive deferred gain amount (which I think reasonable). This could be good research tool for whoever have trouble with 1031,  Here is the link: https://www.1031.us/wp-content/uploads/Form8824Workbookfor2017.pdf

 

Because the field "cash received" in Turbotax plays a big role in calculating recognized gains, my question is: what exactly should I enter in this field? What is the meaning of the field "cash received"?

 

0 5 2304
5 Replies
Level 15
Mar 12, 2022 12:01:49 PM

I believe the interview section of the program is asking for any cash-boot you received.

Level 2
Mar 12, 2022 12:24:10 PM

I am still confused.

Thanks for the quick reply

 

Regarding "any cash-boot you received", which of the following do you mean

  • The cash which was in put in my exchange escrow account after the old property was transferred to the new owner, or
  • the cash I actually received after the whole exchange was done (i.e. the leftover cash in my exchange escrow account after paying down payment / cost to acquire the replacement property), or 
  • the amount from old property's selling price, minus old property's loan balance at closing, minus the down payment amount for the replacement property, or
  • any other definition of "cash received" in section "different property received"?

 

Expert Alumni
Mar 15, 2022 7:46:56 PM

@ramonzzf  In a 1031 exchange sometimes the two properties aren't completely even.  So in order for us to trade my property for your property I have to add some cash in order to even us out.  This extra cash is referred to as 'boot' and is what the TurboTax program is asking about.

Level 2
Mar 15, 2022 9:29:36 PM

@RobertB4444 , it says "cash received" on line L in the "summary smart sheet" of form 8824. 

Level 15
Mar 15, 2022 10:15:40 PM

boot is cash or any noncash received from the exchange. the cash you put in is not boot.   and if you put in too much cash and get the excess back that is not boot either.