SECTION 4. APPLICATION OF SAFE

HARBOR METHOD FOR REPORTING FAILED LIKE-KIND EXCHANGES

.01 No gain recognized until payment received . If a QI defaults on its obligation to acquire and transfer replacement property to the taxpayer and becomes subject to a bankruptcy or receivership proceeding, the taxpayer generally may not seek to enforce its rights under the exchange agreement with the QI or otherwise access the sale proceeds from the relinquished property outside of the bankruptcy or receivership proceeding while the proceeding is pending. Consequently, the Service will treat the taxpayer as not having actual or constructive receipt of the proceeds during that period if the taxpayer reports gain in accordance with this revenue procedure. Accordingly, the taxpayer need recognize gain on the disposition of the relinquished property only as required under the safe

26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability. (Also Part 1, § 1031.)

Rev. Proc. 2010–14