1031.Exchange INTELLIGENCE NETWORK
License territory Acquire
CORE 1031

Exchange funds

Also called: 1031 proceeds · exchange proceeds

⌕ Search dictionary
PLAIN-ENGLISH DEFINITION

Sale proceeds being held and deployed as part of the exchange structure.

What it means in practice.

In a conventional deferred exchange, access to exchange proceeds is restricted so the taxpayer does not have actual or constructive receipt inconsistent with the safe harbor.

Why it matters.

Funds handling is one of the highest-risk operational parts of an exchange and should be understood before closing.

Additional notes.

In a conventional deferred exchange, access to exchange proceeds is restricted so the taxpayer does not have actual or constructive receipt inconsistent with the safe harbor.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/faqs/sale-or-trade-of-business-depreciation-rentals/sales-trades-exchanges/sales-trades-exchanges-2irs.gov ↗irs.gov/publications/p544
CONNECTED LANGUAGE

Related definitions.

Core 1031Qualified intermediaryA commonly used independent facilitator that enters into an exchange agreement and helps structure transfers so the taxpayer does not simply receive the exchange proceeds.Core 1031Constructive receiptA tax concept under which money may be treated as received even if it is not physically in the taxpayer’s hands, because it is available or controlled by the taxpayer.Exchange MechanicsQualified escrow accountAn escrow arrangement meeting specified safe-harbor requirements that can restrict the taxpayer’s access to exchange funds.
KEEP LEARNING

Build the vocabulary before the transaction clock starts.

Explore the federal framework, exchange structures, replacement-property intelligence and professional roles connected to this term.

Open learning centerSearch another term