Biden tax plan series
A certain provision in the Internal Revenue Code allows you to defer (postpone) gain on the sale of a business or investment property. “Tax deferred” means that the tax is postponed (not forgiven). The number “1031” is a section of the Internal Revenue Code which allows preferential treatment of gain.
Current tax law
- Present law allows you to defer gains on sale of business and investment assets.
- Internal Revenue Code Section 1031 allows you to postpone taxes instead of paying now.
- You can work out 1031 exchanges by purchasing a like kind property with equal or more value.
- There’s no limit on gain that you can defer.
Proposed tax changes
- Gain deferral is capped at $500,000 for a taxpayer or $1 million for joint returns.
- Realized gains in excess of $500,000 are subject to tax.
- This proposal would be effective starting in 2022.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation.
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He retired after 50 years of defending taxpayers audited by the IRS, EDD, BOE and other governmental agencies. He published a book on “How to Avoid or Survive IRS Audits” that’s available at Amazon. Readers may email tax questions to [email protected].