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Starker IRS 1031 Tax Deferred Exchange |
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Tuesday, 07 August 2007 |
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This article will give you a little background on the history of the 1031 tax exchange and why it is sometimes known as a Starker IRS 1031 tax deferred exchange. Back in 1970, land held by the Starker family was bought by the Weyerhauser Company. At this point the 1031 tax deferred exchange simply involved a swapping of property between two parties. The Starker family was very forward thinking in creating a trust agreement with the Weyerhauser Company to hold proceeds of the sale of their land within a separate bank account.
The provisions within this trust allocated this money only for the purchase of replacement property for the Starker family and the purchase would be handled by the Weyerhauser Company. The trust also specifically limited use of the funds only to buying replacement property. This allowed the at-that-time current provision of swapping properties to be met.When this was first presented to the IRS, it denied the benefits of the 1031 to the Starker family. The IRS argued for the literal interpretation of the law and said that there must be a swapping of property between two parties. When this battle between the IRS and the Starker family went to court, the court ruled in favor of the Starker family and the law is known to this day as the Starker exchange. Changes have been made to this law since then and much of that change has been credited to the battle which the Starker family won. It is much more practical now to be able to do a 1031 tax deferred exchange because before it was very hard to find another party who is willing to swap properties with you. The current system allows you much more flexibility in exchanging properties which gives you more freedom in choosing the type of property you want to buy in exchange for the property which you've sold. Hopefully this article on the Starker IRS 1031 Tax Deferred Exchange has given you some good background on how the law was changed to better serve the common investor and the benefits which you now enjoy as a result of the Starker family. |
