1031.Exchange INTELLIGENCE NETWORK
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OWNERSHIP & ENTITIES

Drop and swap

Also called: drop & swap · partnership drop

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PLAIN-ENGLISH DEFINITION

Industry slang for restructuring partnership-owned property into direct co-ownership before one or more owners pursue separate dispositions or exchanges.

What it means in practice.

These transactions raise holding-purpose, partnership, assignment-of-income and timing issues and are not a statutory safe harbor.

Why it matters.

The phrase is common in 1031 practice but should trigger professional tax and legal review, not a DIY template.

Additional notes.

These transactions raise holding-purpose, partnership, assignment-of-income and timing issues and are not a statutory safe harbor.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/publications/p544
CONNECTED LANGUAGE

Related definitions.

Ownership & EntitiesPartnership interestAn ownership interest in a partnership or entity taxed as a partnership.Ownership & EntitiesTenancy in commonA form of direct co-ownership in which each owner holds an undivided interest in property.Ownership & EntitiesSwap and dropIndustry slang for completing an exchange and later distributing property interests from an entity to owners.
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