How 1031 Like-Kind Exchanges work.

Section 1031 of the Internal Revenue Code (IRC) allows businesses to defer the tax burden - perhaps indefinitely - on the sale of capitalized assets, provided those savings are reinvested in “like-kind” items. For example, if you sell a bulldozer and use the proceeds to purchase a scraper, the taxes on your realized gain are deferred.

1031 is a well-established tax strategy that’s been on the books for over 85 years. Businesses in a wide range of industries are using it to transform billions of dollars of tax liability into available cash.

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The highly qualified Qualified Intermediary.

The benefits of a 1031 Like-Kind Exchange (LKE) are realized through the services of a qualified intermediary (QI) like Accruit, the leading QI for personal property exchanges in the United States. IRC rules mandate that funds be handled by a disinterested third party. This third party–the qualified intermediary–may not be your employee, attorney, accountant or other person related to your business.

As the QI, Accruit holds sale proceeds, prepares the necessary tax deferral documents and disburses proceeds, as specified in the tax code. Working in concert with your tax advisor, an Accruit-enabled LKE defers gain recognition when the item is sold, allowing you to redirect dollars into your business that would otherwise be paid to the IRS. Since the QI performs a crucial role, be wary of individuals who are not QI professionals but profess to do “QI services.”