Our client owned a commercial building in a prime Manhattan location that was acquired many years ago. When the site became the subject of a bidding contest, we negotiated its sale for an extraordinary premium over the original acquisition price.
The original acquisition price and tax cost basis was a negligible amount compared to the sale price. We advised our client that a 1031 like kind exchange would be the most favorable structure. To qualify, our client had to identify the replacement property in the exchange transaction within 45 days of the sale, and the closing on the replacement property had to occur within 180 days of the original closing.
As part of the effort, we evaluated fourteen potential replacement properties over approximately 30 days. Our client was able to exchange the original property for two replacement commercial properties in New Hampshire Georgia, and paid no taxes on the significant gain on sale.