Page 16 THE MALDEN ADVOCATE–Friday, June 17, 2022 1031 EXCHANGES AND LIMITED LIABILITY COMPANIES I nternal Revenue Code Section 1031 allows an investor of real estate to sell his or her property at a substantial gain and replace that property with like-kind property within a certain period of time in order to defer paying capital gains taxes. The Investor must use a qualified intermediary to handle the transaction from beginning to end. The deferred capital gain serves to reduce the cost basis of the replacement property for purposes of a later sale and for purposes of calculating depreciation on the replacement property. Form 8824 is used to report the “like-kind” exchange as part of your 1040 or entity-level return. A single member LLC can enter into a 1031 exchange as well as a two or more member LLC. A single member LLC is transparent for tax purposes. No separate tax return has to be filed. If you are a self-employed individual operating as a single member LLC, you would simply report your income and expenses on Schedule C. If you own rental real estate titled in the name of a single-member LLC, you would report the rent income and expenses on Schedule E. If, however, you operate as a two or more member LLC, you must file Form 1065, U.S. Return of Partnership Income. You can also choose to be taxed as a corporation and either choose regular C Corporation status or S Corporation status. In Massachusetts, a common law state, a husband and wife that are 50% owners of a limited liability company must file Form 1065. In community property states, a husband and wife are considered to be one owner and therefore do not have to file Form 1065. Even if you owned a rental property just in your name, you could title the replacement property in the name of a single member LLC and still take advantage of Internal Revenue Code Section 1031. The single member LLC is disregarded for tax purposes. For a two or more member LLC, the 1031 exchange must take place at the entity level. The LLC would sell the rental real estate that it has title to and would title the replacement property in its name as well. The LLC would file its own Form 8824 to report the sale, deferred gain, any recognized gain if the full selling price was not reinvested, etc. A safe harbor holding period of the replacement property in order to secure the validity of the 1031 exchange is two years. Three years would be even better. There often are complexities when one or more of the partners do not wish to remain invested in rental real estate and would simply rather cash out and pay the tax. In that event, the partnership would look to into formulating a tax strategy that would accommodate the partners wishing to remain invested and wishing to defer the recognition of gain and the partners that wish to cash out can pay the capital gains tax on their share of the capital gain. Taking advantage of the 1031 exchange can save a significant amount in capital gains taxes and it should not be overlooked. Joseph D. Cataldo is an Estate Planning/Elder Law Attorney, Certified Public Accountant, Certified Financial Planner, AICPA Personal Financial Specialist and holds a Master’s Degree in Taxation. Mystic Valley Baseball Eagles advance with tourney win over Greenfield Special to The Advocate A fter finishing 17-4 on the regular season this past weekend, the Mystic Valley Regional Charter School boys’ baseball team defeated Greenfield High School by a score of 2-0, advancing Mystic Valley to the Sweet 16 in the Massachusetts State Baseball Tournament. It was not easy starting with a two-hour bus ride from Malden to Greenfield, and it ended with closer Dylan Santoro coming in for one-third of an inning, up by two runs, with runners on first and second. Santoro, with ice in his veins, threw four pitches to strike out Greenfield and end the game. Mystic Valley’s starting pitcher, Brandon Paris, was stellar, pitching shutout ball for six and twothirds innings and letting up only two hits, while striking out five. Paris handled the immense pressure with ease, but he didn’t do it alone, having some great defense behind him. In fact, after taking an early lead (1-0) in the first inning, Greenfield had a runner on second with two outs, and their batter hit a sinking liner to left that looked certain it would drop for a hit. Instead, senior left fielder David Jankowski robbed him with a diving catch, saving a certain run that would have tied the game. Mystic Valley Baseball: For Mystic Valley the game was a defensive gem. Right fielder Jack Mangone caught three fly balls; two of the three were line drives in the gap that he had to track down. Center fielder Lukas DeGuire, not to be outdone, also made an outstanding play: tracking down a line drive in right center and making an onthe-run catch. Behind the plate – besides calling a great game – senior Jake Stover picked off a runner at second base; shortstop Dylan Santoro had to pick the ball off the ground to tag out the runner, ending a threat in the fourth inning. While the defense was making potential game-saving plays, the offense was chipping away at a very good Greenfield pitching staff. In the first inning, Mystic Valley capitalized on a dropped third strike that got Dylan Santoro to first base. Two hits later freshman Joshua Stover drove him in with a base hit to right. Although Mystic Valley’s offense would threaten a few more times, they wouldn’t score their second and final run until the fifth inning when Jack Mangone singled to start the inning off and advanced to second and third on wild pitches. Mangone was then driven in by a sacrifice fly to right hit by Jake Stover. “This game was pressure packed from the opening pitch,” said first year Head Coach Bryan Straccia, “and now Mystic Valley has a chance to do what no other Mystic Valley baseball team has ever done, make it past the sweet sixteen to the round of eight.” Mystic Valley’s next game will be against Mount Greylock, another Western Mass. team. Mystic Valley Regional Charter School Eagles Varsity Baseball Team, pictured from left to right: Top row: Assistant Coach Thomas Hannifan, Lukas DeGuire, Brandon Paris, Tyler Santoro, Assistant Coach Sean Regan (in back), David Jankowski, Amine Jamouq, Jacob Stover, Josh Stover, Dylan Santoro and Timothy Rosell; bottom row: Riya Tanizaki, Liam Thompson, Harrison Mahoney, Jack Mangone, Liam Powers, Vishant Chawla, James Lyman, Benjamin Hickey and Head Coach Bryan Straccia (far right). REAL ESTATE TRANSACTIONS BUYER1 ORLOVE, STEVEN PIZZI, JOSEPH PALLANCA, ISABELLE BUYER2 ORLOVE, GARY SELLER1 WONG, LAI-MUI F 495 499 MEDFORD ST LLC CANNON, DANIEL R CANNON, EMILY R SELLER2 Copyrighted material previously published in Banker & Tradesman/The Commercial Record, a weekly trade newspaper. It is reprinted with permission from the publisher, The Warren Group. For a searchable database of real estate transactions and property information visit: www.thewarrengroup.com. ADDRESS 30 FRANKLIN ST #409 495-499 MEDFORD ST 52 CRESCENT AVE CITY MALDEN MALDEN MALDEN DATE 05.25.22 05.27.22 05.26.22 PRICE 395000 1300000 1222000
17 Publizr Home