1. A C OMPLETE G UIDE TO IRC §1031 T AX D EFERRED E XCHANGES Todd R. Pajonas, Esq., President

6. LIKE KIND – REAL PROPERTY 6 UNIT APARTMENT BUILDING RELINQUISHED PROPERTY

7. LIKE KIND – REAL PROPERTY 6 UNIT APARTMENT BUILDING RELINQUISHED PROPERTY 5 UNIT APARTMENT BUILDING REPLACEMENT PROPERTY

8. LIKE KIND – REAL PROPERTY 6 UNIT APARTMENT BUILDING 6 UNIT APARTMENT BUILDING RELINQUISHED PROPERTY REPLACEMENT PROPERTY

9. LIKE KIND – REAL PROPERTY 6 UNIT APARTMENT BUILDING 6 UNIT APARTMENT BUILDING RELINQUISHED PROPERTY REPLACEMENT PROPERTY

10. MYTH - LIKE KIND PROPERTY LIKE KIND FOR REAL ESTATE IS MUCH MORE INCLUSIVE THAN THIS. RELINQUISHED PROPERTY REPLACEMENT PROPERTY

13. LIKE KIND – PERSONAL PROPERTY LIKE KIND NOT LIKE KIND

19. BALANCING THE EXCHANGE 100,000 Of Boot Is Recognized $25,000 $275,000 $300,000 Net Equity $50,000 Costs $75,000 $325,000 $400,000 Debt $600,000 $750,000 Contract Price Boot Replacement Relinquished

20. SALE VS. EXCHANGE $ 67,450 Total Tax Due $18,700 33,750 15,000 3rd Calculation: Tax Due Recaptured Depreciation Straight-line ($75,000 x 25%) Federal Capital Gain ($225,000 x 15%) State Tax ($300,000 x 5%) $300,000 Equals: Capital Gain $700,000 - 375,000 - 25,000 2nd Calculation: Capital Gain Today’s Sales Price Less: Net Adjusted Basis Less: Cost of Sales $375,000 Equals: Net Adjusted Basis $400,000 + 50,000 - 75,000 1st Calculation: Net Adjusted Basis Original Purchase Price (Basis) Add: Capital Improvements Less: Depreciation

21. SALE VS. EXCHANGE - 67,450 $ 387,550 Less: Taxes Due and Payable Equals: Net Equity $455,000 Equals: Gross Equity (gross purchasing power) $700,000 - 25,000 -220,000 4th Calculation: Net Equity Today’s Sales Price Less: Cost of Sales Less: Loan Balance Exchange $455,000 x 4 = $1,820,000 Purchase Price 5th Calculation: Sale vs. Exchange Sale $387,550 x 4 = $1,550,200 Purchase Price

28. DELAYED EXCHANGE STRUCTURE EXCHANGER BUYER SELLER IDENTIFICATION PERIOD TIME PERIOD TO ACQUIRE REPLACEMENT PROPERTY 0 45 DAYS 180 DAYS $ $ Sale Purchase Deed Deed