1301 Exchange General Glossary of Terms...

Accommodator: See Qualified Intermediary.

Adjusted Basis: The original cost of the property, reduced by depreciation deductions and increased by capital expenditures.

Basis: In general, basis is the cost of the taxpayer’s property.

Boot: Any cash or non-cash consideration (including property) that is not like-kind property. If boot is received by the taxpayer in the exchange, it is likely that all or some of the boot will be taxed.

Constructive Receipt: Exercising control over the exchange funds without actual physical possession.

Delayed Exchange: There is a delay between the time of the sale of the Relinquished Property and the purchase of the Replacement Property.

Exchange Agreement: A written agreement between the Qualified Intermediary and the Exchanger setting forth Exchanger’s intent to exchange relinquished property for replacement property and the responsibilities of each party.

Exchange Period: The Exchange Period is the lessor of (i) 180 calendar days from the date of the closing of the Relinquished Property or (ii) the due date (inclusive of extensions) of the Exchanger’s income tax return for the year the exchange took place. If the exchange is closing in the last quarter of the year, the taxpayer will need an extension on his/her tax return in order to get a full 180 days.

Exchanger/Exchangor: The taxpayer completing the exchange. This may be an individual, partnership, LLC, corporation or other business entity.

Identification Period: 45 days from the date of the closing of the sale of the Relinquished Property. The Exchanger can only acquire property which has been property identified during this period. 

Like-Kind Property: Refers to the nature or character of the property, not its grade or quality. Like-Kind Property can include bare land, commercial property, retail stores, apartments, duplexes, and certain leasehold interests.

Qualified Intermediary: An unrelated party that party who handles the exchange in accordance with Section 1031 of the Internal Revenue Code.

Relinquished Property: The property to be sold by the Exchanger.

Replacement Property: The like-kind property to be acquired or received by the Exchanger.

Reverse Exchange: The Replacement Property is acquired first, and the disposition of the Relinquished Property occurs later.

The contents herein are intended to convey general information only and not to provide legal or tax advice.  You are advised to contact your legal or tax advisor for specific advice on 1031 exchanges.  No action should be taken in reliance on the information contained herein and we disclaim all liability in respect to actions taken or not taken based on any or all of the contents herein to the fullest extent permitted by law.