In the case of a deferred exchange, there must be a written exchange agreement under which the IQ facilitates the sale of the abandoned property and the acquisition of the replacement property. The IQ receives funds from the sale of the surrendered property and the exchange agreement expressly limits the rights of the subject to receive, mortgage, lend or obtain benefits of money or property held by the IQ before the end of the trading period [Treasury Regulations section 1.1031 (k) -1 (g)).4)]. A Qualified Intermediary (IQ), also known as the Accommodator, is a company that facilitates the exchange of a tax benefit under Section 1031 of the Internal Income Code. The role of an IQ is defined in Les Treas. Under Section 1031 of the IRC, an owner of business or investment properties may exchange this property for other similar properties within a statutory time frame and defer the current recognition of the benefit of the sale of the former property. In addition to holding stock funds, the role of an IQ is to create the exchange documents that turn your transaction into a return. Without documents in The Value of 1031, your sale will most likely be a taxable event, even if you reinvest the money in a new property. Legal 1031 will ask you to send a copy of your abandoned contract or sales and sales contract and use the information contained in the contract to establish the exchange documents. To have a valid exchange, the IQ must be part of your sales contract.
These documents must be created before selling your abandoned (sale) property. There are no licensing requirements for intermediaries. You do not need to be an unqualified person within the meaning of the internal income code to be qualified. The code prohibits certain “agents” of the taxpayer from being qualified. Accountants, lawyers and brokers who have served taxpayers in their professional skills in the previous two years are disqualified from the activity of qualified intermediary for a subject in an exchange. Safe Harbor rules allow the subject to surrender a large number of arm length transactions, including the possibility that the EAT could be used as an IQ in a simultaneous or deferred exchange. In addition, the same person can serve as an EAT for replacement property and IQ for the sale of the abandoned property. In this way, escorts who have served as QIs can offer full exchange services.