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1033 exchange followed by 1031 exchange of land

Technical topics regarding tax preparation.
#1
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California
If not all of the insurance proceeds from a fire are rolled into replacement properties which results in a Section 1033 recognized gain on that portion (the cash out or boot) then next year without rebuilding you 1031 exchange the land, what happens with the Section 1033 gain that was recognized? Is it the basis of the relinquished land used to determine realized gain on Form 8824? Thanks.
 

#2
Doug M  
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22-Apr-2014 1:09pm
Location:
Oregon
See §1033(b) for determining basis in property.

That gain that was not replaced happened in the year of the fire, and you need to file an amended return for the year of the fire. A subsequent §1031 transaction will not defer the gain.

https://www.law.cornell.edu/uscode/text/26/1033
 


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