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California to require annual reporting following like-kind exchanges of out-of-state property

July 1, 2014 by Daniel G. Leave a Comment

California to require annual reportingWhen real property located in California is exchanged (1031 exchange) for property located outside California, the gain realized from the California property that is deferred under section 1031 remains a source of California taxable gain on the sale of the second property .

Didn’t know this?

Neither did many exchangers of California property, with the consequence that all too frequently this tax was not paid, depriving California of significant revenue. In June 2013, the California legislature aimed to plug that revenue leak by addingnew sections 18032 and 24953 to the Revenue and Taxation Code.

Beginning in January 1, 2014, a taxpayer who has exchanged California real property for real property outside of California will have to file an annual report with the Franchise Tax Board until the deferred gain is recognized. Failure to file can lead to immediate adverse tax consequences http://tinyurl.com/k9c3zos

Filed Under: out of state property, Property Taxes

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Mr. Gonzales is in private practice, providing representation, advice and counsel in complex real estate, corporate, and business transactions on behalf of public and private institutions, businesses, and individuals.

This material has been prepared by Daniel S. Gonzales for informational purposes only and does not constitute advertising, a solicitation, or legal advice. Neither delivery nor transmission of this material or the information contained herein is intended to create, and receipt thereof does not constitute formation of, an attorney-client relationship. The reader should not rely upon this information for any purpose without seeking legal advice from a licensed attorney. The information contained in this material is provided only as general information and is not promised or guaranteed to be correct or complete. Daniel S. Gonzales expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this material.

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