“Deadline Relief For Like-Kind Exchanges Sparks Uncertainty”
Although the IRS extended deadlines for the identification and purchase of properties in like-kind exchanges in response to the novel coronavirus pandemic, it is still unclear whether the deadlines are extended until July 15 or for an extra 120 days.
…But it is not clear how Notice 2020-23 affects Section 1031 exchanges, since the notice says only that “specified time-sensitive actions,” such as any exchange transactions under Section 1031 that have a deadline between April 1 and July 15, can be postponed until July 15. Meanwhile, Revenue Procedure 2018-58 specifically extends both the 45- and 180-day like-kind exchange deadlines by a minimum of 120 days, which could place those deadlines after July 15, according to Todd D. Keator, the tax practice leader at Thompson & Knight LLP.
“While the industry is thankful for the notice, it would have been more beneficial if the IRS had issued guidance expressly including 1031,” Keator said.
The IRS did not respond to questions from Law360.
Keator told Law360 that according to his interpretation, Notice 2020-23 does not invoke the extra 120 days under the 2018 revenue procedure. The reason, he said, is that the IRS is instead using its ability to provide tax deadline relief as allowed under Section 7508A to allow any deadline that falls between April 1 and July 15, 2020, to be postponed until July 15, he said.