1031 Glossary

Accommodator - Qualified Intermediary. An accommodator can also be a Buyer or Seller in a three-way exchange.

Boot - Unlike property or non-qualifying property such as securities, cash, notes, partnership interests, etc. Taxpayer who receives boot ("unlike" property) will have to recognize gain to the extent of the net boot received or realized gain, whichever is less.

Buyer - Individual that would like to purchase Taxpayer's Relinquished Property.

Buyer-Accommodator Exchange - Exchange wherein Buyer acts as accommodator. Exchange occurs after Buyer acquires Replacement Property from Seller.

Constructive Receipt of Cash - Receipt of cash by Taxpayer's agent in transaction or "deemed receipt" by Taxpayer as a result of Taxpayer's legal right "to demand cash" under an improperly structured exchange.

Like-Kind - Refers to the "nature or character" of the property and not to its "grade or quality." That is, real property held for investment or the productive use in a trade or business may generally be exchanged on a tax-deferred basis for other real property. Personal property held for investment or the productive use in a trade or business may generally be exchanged on a tax-deferred basis for other personal property, provided the personal property is of "like kind" or "like class." Professional tax advice should always be obtained when planning exchanges.

Net Effective Equity - Taxpayer's gross equity (Market Value less Loans) less all transaction costs incurred in disposition (Relinquished Property) and acquisition (Replacement Property) phases of the exchange. Similar to   Seller's "net proceeds."

Qualified Intermediary - "Fourth party" who assists Taxpayer in accomplishing exchange. Qualified Intermediary enters into formal exchange agreement with Taxpayer and, pursuant to agreement, holds Taxpayer's "Net Effective Equity" and uses same to acquire Replacement Property.

Phase I - Disposition of Taxpayer's Relinquished Property.

Phase II - Acquisition of Taxpayer's Replacement Property.

Relinquished Property ("Down Leg") - Property Taxpayer disposes of in exchange.

Replacement Property ("Up Leg") - Property Taxpayer acquires in exchange .

Seller - Individual or entity that owns Replacement Property desired by Taxpayer.

Seller-Accommodator Exchange - Exchange wherein Seller acts as accommodator. Exchange occurs first; Seller then transfers Taxpayer's property to Buyer.

Taxpayer (Exchangor" or "Exchanger") - Individual or entity desiring an exchange.