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Introduction

SECTION 4. EXCHANGES OF

Internal Revenue Bulletin 2003-22 · 2026-10-03 edition · updated 2026-10-04 · United States

RELINQUISHED PROPERTY AND REPLACEMENT PROPERTY

.01 Separate and Distinct Exchanges . In the case of an LKE Program, the taxpayer’s transfer of each relinquished property or group of relinquished properties and the taxpayer’s corresponding receipt of each replacement property or group of replacement properties with which the relinquished property or group of relinquished properties has been matched by the taxpayer is treated as a separate and distinct exchange for purposes of § 1031. The determination of whether a particular exchange quali

.11 Sections 1.1031(k)–1(g)(3) and (4) provide that the application of the safe harbor requires that in the case of a qualified escrow account, a qualified trust, or a qualified intermediary, the escrow holder, trustee, or intermediary must not be a “disqualified person.”

.12 Section 1.1031(k)–1(k)(2) provides that a person that is the agent of the taxpayer at the time of the transaction is a disqualified person. For this purpose, a person who has acted as the taxpayer’s employee, attorney, accountant, investment banker or broker, or real estate agent or broker within the two-year period ending on the date of the transfer of the first of the relinquished properties is treated as an agent of the taxpayer at the time of the transaction. Solely for purposes of §1.1031–1(k)(2), performance of the following services will not be taken into account: (a) services for the taxpayer with respect to exchanges of property intended to qualify for nonrecognition of gain or loss under § 1031; and (b) routine financial, title insurance, escrow, or trust services for the taxpayer by a financial institution, title insurance company, or escrow company.

.13 The Service and Treasury Department have determined that it is in the best interest of sound tax administration to provide taxpayers with guidance regarding the qualification of LKE Programs under § 1031. Accordingly, this revenue procedure provides safe harbors that clarify the application of § 1031 and the regulations thereunder to LKE Programs.

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▸Contents — Internal Revenue Bulletin 2003-22
Internal Revenue Bulletin 2003-22

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