1033 clarifications

I have some questions about 1033 exchanges (not 1031):

  1. Since you don’t need an intermediatary to handle the money, can you invest the money in other areas (such as stock) until it is time to do the exchange? Or do you have to keep the money all together waiting for the exchange?

  2. If you fail to do the exchange at the end of three years and just decide to pay taxes on the proceeds, do you have to pay panelty?

  3. Can one exchange commercial properties with residential properties such as SFR?

1031 and 1033 are essentially the same except:

a) 1033 is for condemned or “taken” property (eminent domain, etc)
b) you have (I think) two years to exchange
c) no intermediary is required

Given that, I would think that the “penalties” and other requirements are the same as for a 1031.

However, I’ve never seen or done one. someone else may have a better answer.