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Author Topic: 1031 Exchanges: Reporting on IRS Form 8824 just got easier, right?  (Read 4431 times)

Offline Andrew_Bitler

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I came across a site called DeferEm.com that allows you to generate IRS Form 8824 and Exchange reports for free.

Those who have used IRS form 8824 for like-kind exchanges know it can become difficult, especially with multi-property exchanges. Each line item is very sensitive, and entry errors can result in heavy tax implications.

This tool appears to save a lot of time, especially when trying to explain to clients, and it prints out a very nice exchange report that we can give to our clients.

Evidently the site is in "sneak preview" so I guess it wouldn't hurt to try for free. 

Offline kdhastedt

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Re: 1031 Exchanges: Reporting on IRS Form 8824 just got easier, right?
« Reply #1 on: March 20, 2007, 05:03:28 pm »

OK, Andrew...you're being "called out"...

You have 8 posts and every single one has to do with this site that you just happen to 'come across'....what's the tie in?  How did you happen to come across it? 

It smells like blatant advertsing...and Hastedt Life Rule # 5 clearly states, "If it smells bad, don’t eat it" (I can provide you access to those rules as well as the Forum Rules, if need be...).

Here's what we do - you have 1 hour to come clean after which, we do our own cleaning, which consists of removing all of your associated posts....

Keith
Moderator
I have CDO...it's like OCD but in alphabetical order - the way it should be!

Offline Andrew_Bitler

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Re: 1031 Exchanges: Reporting on IRS Form 8824 just got easier, right?
« Reply #2 on: March 20, 2007, 05:54:46 pm »
My friend developed the website.
It was created by small real estate investors, for real estate investors.
It's a free site, no advertisements, no catch.
I'm spreading the word, and they look forward to feedback.

I apologize for the "spamminess" but I think the website is a really good tool and a lot of people can take advantage of it. And really, it's free and you can save a lot of money. It's not like I get anything out of it.

Once again, I'm sorry. I didn't think it would be perceived as spam, I was just trying to spread the news. For example, DeductEm just came out a day ago, and not too many people know about it. It might help a few people out there that still haven't filed their taxes yet.

I'm just a small investor who made it big by using all the resources available to me, and I was just trying to spread the word to others about how they can save themselves money.

To the Moderator:
Once again, I apologize. It was not my intention to break the rules of this forum.

Offline kdhastedt

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Re: 1031 Exchanges: Reporting on IRS Form 8824 just got easier, right?
« Reply #3 on: March 20, 2007, 05:59:18 pm »

I can accept that answer...I have a hard time with "I came accross this great site..." posts when in fact, you didn't 'come across' it at all.  This smacks of deceit and I personally don't think that's a good way of doing business...

In the future, be upfront and honest and the chances are, if it is helpful, educational, and you reap no personal profit from it, then it will be fine...

Keith
Moderator
I have CDO...it's like OCD but in alphabetical order - the way it should be!

Offline Andrew_Bitler

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Re: 1031 Exchanges: Reporting on IRS Form 8824 just got easier, right?
« Reply #4 on: March 20, 2007, 06:02:41 pm »
You are absolutely right, and once again I apologize.

Offline Dave T

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Re: 1031 Exchanges: Reporting on IRS Form 8824 just got easier, right?
« Reply #5 on: March 24, 2007, 12:13:26 am »
Andrew,

I visited your friends' website and filled in the blanks for an hypothetical exchange. 

I could not print the 8824.  The error message was that the file generated was not compatible with Adobe Acrobat 8.0.  Perhaps you could ask your friends to fix this.

Another issue I have with the web site is that they don't quite finish the job when the 8824 is done.  The software generates an exchange report that tells me what the cost basis will be in the replacement property, or the cost bases when the exchange involves multiple replacement properties (I had two in my test). 

The next step would be to determine the depreciation basis.  Unfortunately, your friends' application stops short here.  When you have an exchange, the basis in the relinquished property becomes the new basis in the replacement property.  Additional money or debt needed to complete the purchase is added to the basis.  The total becomes the new cost basis in the property.

The distinction here is that the basis carried over from the relinquished property retains the same depreciation schedule that was in effect on the relinquished property.  If the old property had 10 years left on its depreciation schedule, then the basis carried over to the new property only has 10 years left.  Let's call this the OLD basis.

New money or debt needed to complete the replacement property purchase is added to the cost basis.  This part of the cost basis is depreciated on a new 27.5 year depreciation schedule.  Let's call this part of the basis the NEW basis.

It would have been nice if your friends' application had gone just one step further and broken the cost basis in the replacement property into its OLD basis and NEW basis depreciation components and told the user how much depreciation was still left on the OLD basis component.

If your friends do not want to do the extra calculations, then a couple of paragraphs to advise users that they have a manual step to perfom would be helpful.  As it stands now, the user is led to believe that they are done once the 8824 is generated.

Perhaps you also could pass this comment to your friends.


 




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