Are there changes/improvements to 1031 Like Kind Exchanges for 2020?

Forum|Forum|5 years ago
November 23, 2020
1 reply
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Last years' posts about this read like a horror story? Is it improved for 2020? Can it be done from Premier version or does it require the Business version?

TurboTax Online

Best answer by samiller34

I understand all of that. I am not trying to file taxes yet, just thinking ahead to decide whether I am going to be able to use Turbo Tax this year when the time comes. I am just asking whether the tools are going to be in place to allow me to get this done.

There is an article by TurboTax online with very brief instructions for IRS Form 8824 that says that it is updated for Tax Year 2020, but that is quite misleading as it does not begin to mention the changes that were put in place early on for timing considerations during the pandemic. That just set me to looking harder in order to see if there was going to be a way to use TurboTax this year.

I am getting more comfortable with it now.

I think TT could easily improve on the 1031 form just by making some adjustments to the "Specific Asset Exchanged" page. Currently, it gives you a list of "real estate assets" to select, which is very nice, but it fails to list the Leasehold Improvement assets, which would also and necessarily be exchanged with the asset. The LHIs need to be included in the list of assets exchanged, so their basis can be used to calculate the deferred gain.

Anonymous_

Level 15

First of all, TurboTax does not handle 1031 exchanges very well in certain instances, particularly multi-asset exchanges (the latter for which you should consider professional income tax preparation).

Second, the online versions are somewhat deficient in terms of data entry for a 1031 exchange. As a result, for a relatively simple exchange, the desktop versions are recommended (since the desktop versions support "forms mode"). For that purpose, you can use either Premier or Home & Business.

Finally, I would not expect the 2020 versions to introduce significant improvements (if any at all) for like kind exchanges since they appear to be somewhat rare for those who go the DIY route and prepare their own income tax returns (i.e., the vast majority of those who do a 1031 exchange most likely use an income tax professional to prepare their returns).

edselbyAuthor

Level 3

Thanks, but I do differ with you a bit. I have a number of rental properties and do not believe that a simple 1031 Like Kind exchange done in the same tax year is cause for abandoning Turbo Tax. I have used it very successfully for years and do not need to hire "expert" help with my taxes. You are my experts and I have always felt that you dealt with my needs very nicely and completely. You (TT) has a document online the says it has "update for 2020" instructions for IRS Form 8824, but it is wrong!! There were significant changes made to the timing requirements for a replacement property because of the COVID-19 epidemic and they are not mentioned in that document. From the number of questions in your database it appears to me that more of your clients are using this feature of the tax laws than you are prepared to admit to.