1031 Exchange Services

In a 1031 Exchange, the main services come from a qualified intermediary (QI), also known by names like facilitator or accommodator. The services are offered on fee-for-service basis. The services from the QI include paperwork, oversight, escrow services and making a bona-fide exchange agreement under section 1031 of the Internal Revenue Code.

For Deferred Exchange treatment, the IRS and the Treasury Department have very rigid requirements. Therefore, to pass these requirements, the services from an experienced professional are essential.

To get the services right, it is essential to ascertain the credentials of the service provider before hiring. In a 1031 Exchange, physical possession or receipt of the money resulting from sale of the property is not allowed, and money is held by the QI only. Therefore, his credibility in terms of bonding, background, reputation and financial strength of are crucial.

The QI is supposed to put the exchange fees in a separate account for the taxpayer, and not commingle that money with any other exchange.

There are several private agencies that maintain a database of qualified intermediaries across the United States. They can be of use in selecting the right intermediary with a good reputation, high level of bonding, competitive fee schedule, financial strength, expertise and integrity.

In the exchange process, the quality of the services is marked by speed, accuracy and safety. A good QI will have concern for the safety of the client’s funds. Through unique exchange accounts he can ensure that the funds cannot be deposited or withdrawn without signatures from both the exchanger and the company. Many taxpayers had the bitter experience of exchange funds misused by unscrupulous intermediaries. Every aspect of the exchange has to be managed according to the IRS rules and regulations.

The build-to-suit exchange is now becoming popular, where the QI is a major player. Also called construction or improvement exchange, this variant has the QI himself acquiring fee ownership of the replacement property and making improvements to it.

After the necessary improvements are done, within the exchange period of 180 days, the ownership is then transferred to the Exchanger.

This new variant of the exchange gives the investors a high degree of flexibility and the opportunity to improve upon an existing property or construct a new replacement property itself. Thus, the range of services provided by the QI and associates are unlimited from the word go.

1031 Exchange Forms

Typically, the 1031 Exchange involves forms like brokers’ price opinion, exemption and nonresident waivers, affirmation of residency, declaration of trust, IRS 8824 like kind exchanges, lien waivers, mortgage interest deductions, multifamily mortgage applications, notice of trustees sale, personal financial statements, power of attorney, promissory note, quit claims, schedule of income property, signature affidavit AKA statement or tax information release forms.

IRS Form 8824 has three purposes. It is not very complicated to fill if the three main purposes are understood correctly. The first one is to help the taxpayer report the dates of sale and replacement property closings, together with identification dates. This is to verify 45/180 date requirements. This information has to be in Part One.

Second is for the taxpayer to highlight their sale and purchase numbers (sale price, selling expenses, adjusted basis, depreciation taken, cost of replacement property) in order to make clear whether there was a full or partial exchange. This information should go in Part Three.

The third purpose is to show the new tax basis of the replacement property. The exchange being a deferral of taxes, the gain incurred by the taxpayer in the old property has to show up in the new property through an equal amount of lesser basis. This information must be there in Part Four.

The information in IRS Form 8824 makes the job of the IRS easy, to review a taxpayer’s prior 8824 Forms to ascertain the appropriate amount of taxable gain and see whether taxes are paid as and when the taxpayer decides to sell and not exchange.

But the exchanger or investor need not be baffled by the forms. The companies hired by the investor would provide the guidance and assist them in filling them out. The follow-up is also their responsibility.

Other forms include General Forms and the Official Identification Form to identify Replacement Properties to be returned not later than 45 days after the close of the Relinquished Property. W-9 Form is to request a Taxpayer ID for the investor. Form 593-C is meant for California Residents doing any sort of exchanges.

Forms related to funding issues include Request for Verification of Funds. This is to obtain a statement of the balance in the account, for the client himself or third parties, lenders, etc. The Miscellaneous Disbursement Request form is for releasing disbursements for appraisals, inspection fees, loan fees, etc.

Request for Return of Exchange Funds is for releasing the remaining exchange funds after the exchange is completed, and not for requesting closing money. Earnest Money Deposit Request is for the closing agent, and not for requesting closing money.

There are two major forms of tax-deferred exchanges–simultaneous exchange and delayed exchange. Numerous variations of these two fall into one category or the other.

The most basic type of exchange is the simultaneous exchange, known as In Lieu Exchange. To illustrate, in simultaneous exchange, the seller wants to sell the property A, agreeing to accept Property B in lieu of cash payment. If the Buyer already owns Property B, then the two parties simultaneously transfer their respective properties adhering to the value rules.

In the case of the buyer not owning property B, the buyer must purchase Property B and transfer it to the seller simultaneously with transfer of Property A to the buyer. To preserve the tax-deferred status of the transaction for the seller, he must not receive any cash or debt relief.

The other is delayed exchange known as a Starker exchange. This delayed exchange is done using a Qualified Intermediary (QI). In this type, the seller closes the sale of his property and escrows the proceeds of the sale with a QI. Here the seller is handicapped from taking possession of the proceeds in order to enjoy the tax-deferral status of the transaction.

After closing the sale of his property, the seller gets 45 days to identify the property or properties to be exchanged and should submit that in writing to the QI. The identified properties have to be purchased within 180 days of the sale of the relinquished property.


Like a stock exchange, a commodity exchange is also an organized market that functions under established rules and regulations. This market is meant for the purchase and sale of commodities. The commodities, which are generally traded in at the commodity exchanges, include natural produce of the soil, mineral products like lead, copper and some manufactured products like cotton goods, hides, skins, and sugar.

All of commodities do not lend themselves to dealings on the commodity exchanges. Generally speaking, products, which possess certain predefined characteristics, are dealt in at the exchanges. The commodity must be homogeneous, that is to say, all units of the lot of a particular commodity must be perfectly identical so that all dealers may mean the same commodity when they mention it in their dealings.

The commodity concerned should be such as will lend itself to grading. Unless it can be classified into recognized and well-known grades, trading will not be very quick, for every time the quality will have to be ascertained. In commodity exchanges, grades of commodities serve as a sufficient indication of the intention of the dealers. Commodities must be durable so as to last for the period of a future contract (ordinarily more than one year). If it perishes rather quickly, contracts for its purchase and sale will be frustrated.

The trading in the commodity must be sufficiently large so as to support the cost of facilities for the purpose provided by the exchange. In other words, there must be steady demand for the commodity. There must be frequent fluctuations in the price of the commodity. If that is not so, the speculators will have no incentive to speculate in it at the exchange. The supply of the commodity must be free and open, and should not be monopolized or controlled by one or a few persons. In addition, the government must not control the supply, and its price must not be regulated by government action.

1031 Exchange

Section 1031 in the Internal Revenue Service is a boon for a prospective investor, selling an investment property and wanting to make a profit by reinvesting in a similar property elsewhere in the country. This wonderful concept works on the principle of gain rolling from the old to the new.

There is widespread ignorance on the modalities about this exchange; as a result, 30-40 percent of property owners end paying tax during the sale. Exchange 1031 not only fructifies into essential tax savings, but also makes possible the swapping of property in the fairest manner at places of choice. No wonder that the 1031 Exchange excites the property market so much.

The new income-generating replacement property gives the investor the double gain of added income and savings from tax that would have otherwise gone to the IRS coffers.

Besides saving the buyer from a huge tax burden coming in the guise of capital gains, the instrument offers maximum immunity and flexibility in reinvesting the money gained from the sale in a replacement property within a given period.

The exchange being time-bound is no kid’s play either. In every exchange of this kind, Qualified Intermediaries (QI) plays a crucial role connecting the buyer and seller. The Federal Tax Code makes service of QI mandatory since 1991 in any exchange.

The federal nature of the 1031 Exchange regulations make the Qualified Intermediary play a wizard in guiding and structuring the exchange, satisfying all parameters and suiting the goals of the clients. It is the QI who does the paperwork required by the IRS to document the exchange. The QI carefully prepares all documents and serves the parties with copies of the exchange agreement, novation agreement and escrow instructions.

The Exchange Agreement reads like a contract between the Exchanger and a Qualified Intermediary. The Exchanger explicitly agrees to transfer his old property to the Intermediary, in lieu of a new property to be supplied by the latter within 180 days. The contract outlines all terms and conditions under which the exchange of properties should take place.

For a 1031 Exchange to take effect, both the old property as well as the new property should be in the category of investment property, capable of generating income. The examples could be rental property, bare land, vacation homes or more.

As soon as the old property is sold, within 45 days the seller has to come out with a list containing two or three probable properties fit for replacement. And the whole process of purchasing the new property or replacement property from the list must be over in a period of 180 days.

The exchange becomes bona-fide only when the title stays intact and whosoever held title to the old relinquished property gets the title of the new property.

In between the sale and purchase of property, the seller of the old property would get no access to the money he accrued from the sale, as the money will be vested with the ‘Qualified Intermediary’ till the exchange gets over.

This 1031 Exchange process has matured and had many names in the past including Like Kind Exchange, Deferred or Delayed Exchange, Simultaneous or Concurrent Exchange, Starker Trust or Exchange, Alderson Exchange, Reverse Exchange, Two, Three, or Four Party Exchange and Baird Exchange.

1031 Exchange Companies

The easiest method to begin a 1031 Exchange transaction is to contact a good Exchange Company. The information concerning the exchanger, time and place of the closings, and a copy of the contract to sell the relinquished property are the preliminary papers to start the process.

From this information, the company makes exchange documents and forwards them to the attorney or customer. The lowest fee charged on a standard deferred exchange is $600.

A 1031 Exchange, like any real estate transaction, involves balancing competing pressures in speed and quality. Therefore, companies in this line recognize pressures and design their service to satisfy both.

Good companies manage all aspects of the exchange. They provide service that is quick, easy to use and backed by experience. In good companies, experienced attorneys are the managers. The senior staff will be rich in experience with regard to investment property transactions. The specialized team of attorneys mainly deals with more complex reverse and build-to-suit exchanges.

The main parameters that distinguish a good and bad exchange company are speed, service and the security they offer the client. Speed lies in the pace at which the company prepares the document. The documents are then sent to the closing table, allowing the seller to close and proceed with the exchange. Service is the dexterity in preparing all documents required for the exchange, including reminders of 45 and 180-day time limits and extensive complimentary consultations.

Security comes in the form of an unconditional guarantee on exchange funds from Insurance Companies: high value fidelity bond coverage and Professional Liability insurance cover.

These days, banks are working with Exchange Service providers. The Cole Taylor Bank of Chicago is one of the largest independent banks in Chicago, and joined hands with Nationwide Exchange Services (NES) of Cupertino in California in a strategic alliance for handling Cole Taylor’s tax-deferred 1031 Exchange business. This Chicago bank specializes in serving the business banking, real estate lending and wealth management of closely-held and family owned small and mid-sized businesses. Cole Taylor Bank is an Equal Housing Lender.

Nationwide Exchange Services is a leading Qualified Intermediary for Tax-Deferred 1031 Exchanges and has conducted thousands of successful 1031 Exchange transactions. It is applying advanced technologies and secure business processes to enhance standards of financial security, visibility and customer service to establish new standards for products and services in 1031 tax-deferred Exchanges.

The alliance enabled the Bank to become part of the NES team and benefited in becoming the primary financial custodian for NES in the Midwest Region. The alliance also helped the bank to offer their customers an expanded set of tax-deferred 1031 Exchange products, such as reverse and build-to-suit exchanges, at the most competitive cost structure.

The systems from NES combined with the bank Cole Taylor’s financial security and brand recognition has spurred confidence in the customers. Collaboratively, they bring distinct advantages to all 1031 customer sets, right commercial developers and corporate entities to individual investors.

Cash For Structured Settlements 5

The structured settlement system began in the early 1970’s in Canada, and it spread to United States and Australia within a few years. A compensation agreement between a plaintiff and insurance company (defendant) for long term and tax-free payments at a time of personal injuries or damages is called a structured settlement. The insurance company will make the payment either to the claimant, surviving family member or beneficiary.

The main benefit of structured settlements is the tax-free nature of the payments over a period of time. There are times when the claimant may insist on a lump sum instead of periodic payments. This might be because the claimant wishes to purchase a new house or cover large medical bills. If the insurance company needs to pay a lump sum, it will generally sell the settlement contract to a financial institution. The defendant will pay the periodic payments to the financial institution along with handling fees including interest.

If the claimant wishes to have a structured settlement, the settlement contract needs to be sold off. If the credit rating of the insurance company is higher in the market, the claimant will achieve a higher profit margin in the sale. Thus, the claimant should be very careful choosing the defendant company, making sure it is financially sound. Before selling the settlement, the claimant needs to consider legal restrictions like tax considerations and lower purchase price offered by the buyer, etc. For instance, cashing the structured settlement makes the beneficiary liable for a tax payment; where as the same beneficiary may get tax savings as an injured plaintiff. However, it is advisable for the plaintiff to take the advice of a lawyer before deciding the sale. The lawyer will analyze the financial consequences of the sale and guide the plaintiff accordingly. Sometimes a court’s approval is needed for the sale depending upon the nature of the settlement contract. The plaintiff has another option of selling a part of the total structured settlement, so that monthly income will be received on the remaining portion. These days, people consider the structured settlement as a funding option for lawsuits.

Cash For Insurance Annuities

An insurance annuity is an investment instrument sold by insurance companies to the public. The investment insurance annuity may be either a fixed or a variable annuity. If the annuity holder pays a fixed amount to an insurance company, the company in turn pays the annuity holder regular fixed monthly amounts either for a fixed time period or for the lifetime to the annuity holder or beneficiaries.

If the contract has a stipulation of lifetime monthly payments, it is called “annuitization”. The company will make monthly payments to holders until their death. If a fixed time period is chosen for the payments, the incomes will only be received until the end of the fixed time period. The company will invest the amount obtained from the fixed annuities into government securities and bonds having low risk. On the other hand, on some annuities, holders will receive periodic payments depending on the performance of the funds or securities that the company has invested in. These annuities are called “variable annuities”.

Some annuities contain immediate periodic payout, while some have deferred. The annuity holder can obtain loan on the cash value of payments to the insurance company. The amount borrowed is not subject to tax, but the holder needs to pay some interest on the loan amount. If the holder dies before the repayment of the loan, that amount will be deducted from the death benefit. On the other hand, if the annuitant wants to cash out the policy, taxes have to be paid on the excess amount received above what has been paid in premiums to the company. The annuitant can defer tax, if any, and reduce insurance costs by converting the investment into a variable annuity. It is advisable for the annuity holder not to exchange the policy by foregoing all the financial benefits like tax exemption, regular monthly payments, etc.

Buy Structured Annuity

A structured annuity can be defined as a regular monthly payment made in return for an initial lump sum. Commonly, an insurance company purchases structured settlement annuities in order to pay regular sums to a plaintiff instead of the lump sum reimbursements. As it happens, the structured settlement annuities are often arranged in the situation of great compensation claims. It’s quite interesting to note that nowadays, individual investors are also buying structured settlements as longer-term investments.

Vis-à-vis compensation-based structured settlements, the individual chooses the annuity-based payments as they provide protection for the long-term and its other benefit includes avoidance of constant losses. Similarly, it is quite cost effective comparably and it’s easy in budgeting and management.

As a matter of fact, the structured settlement payments can be inflexible and often fail their intended purposes. There is no way to gain access to any of the money in advance of the payment due date, no matter what the crisis or how desperate the circumstances.

It is this total lack of flexibility in helping recipients in a time of need that prompted the starting of the structured settlement purchasing industry and financial firms that buy structured annuity. Sometimes investors getting structured payments have to experience financial problems. Thus, liquidating a portion of a structured settlement is the most essential alternative to solve such needs.

However, it is advisable to sell only that portion of a payment stream required to fulfill an immediate need. There are a variety of purchase options available. They include lump sum payoff, partial lump sum payout, and restructured payment stream among the others. It’s also wise to spend time before entering to structured settlement annuity, as a wrong step can prove costly and time consuming. The best step would be to seek professional advice in case of a doubt.

Buy Annuity

The financial world offers various forms of gains on your investments. These returns on investment depend largely on the sum of money you are willing to devote and the amount of risk you are agreeing to take. If you have sound knowledge of investments in capital markets, you can profit from the ups and downs of equities. However, if you do not want to take much risk and are looking for a sizeable income annually as well for a stipulated amount of time, you could buy an annuity.

The term ‘annuity’ can be defined as a contract between a person and a financial company. This type of investment is ideal for those investors who value periodic gains at comparatively lower risks. Typically, when a person buys annuity, the financial firm guarantees to disburse a fixed amount of remuneration every year for a stipulated term of years or till the person is alive. Annuity is generally offered by insurance companies and financial institutions like banks. Almost anybody can buy an annuity and benefit from its yearly returns.

There are different types of annuities offered in the financial markets. Some annuities pay a fixed amount to only the person who bought it till he is alive. In the event of death, even premature or accidental, the annual payment is withdrawn, legally. However, there are other forms of annuity that provide benefits to a spouse or other beneficiary as entitled by the person who bought it. Similarly, there are ranges of annuity that offer fixed benefits and varying returns on investment. Nevertheless, they must be carefully considered while weighing all options before entering into a contract with the financial firm. In the event of early or premature withdrawals, they attract penalties. The investor must also be cautious about certain factors like high sales commissions and expense ratios that occur while buying annuity.

Business Financial Services

Banks provide their financial services to clients through personal online banking, making banking more convenient for individuals who may not have the time to go to banks. However, these services are not only offered to clientsx92 personal accounts but are also available to owners of small businesses and to corporations as well. In the same way that personal banking is made easier, everyday banking is made simple, cost effective, and fast so that business owners can devote more time in running their businesses.

The services that banks provide for business-owners range from simple bookkeeping to sophisticated cash-management services; tailor-fit money-management tools are also provided to help you increase the efficiency of your cash flow. Some of the services that banks provide to business-owners include providing checking accounts, savings accounts, payment processing, and cash management. These are aimed to help you have easy access to your funds, earn interest, and manage and grow your money, which is very important in running a business.

For corporate and institutional clients, banks have also lined up a number of services that can help you with your banking needs. These services include asset management, which can help you supervise and keep track of your assets and their performance. Benefits and retirement services are also provided to you so that the bank can manage the salaries and benefits that your corporation provides to employees. Other services include access to capital markets, cash management and deposit services, domestic correspondent banking, insurance and international banking for your export needs, lending and financing, risk management, sales and trading, and trust services.

In the same way that banks offer security to personal bank accounts, your business and corporate accounts are also assured of the utmost security. Access codes and passwords are also given, and encryption technology is used to assure you of the confidentiality of your transactions, which businesses take measures at protecting.

In the same way that online banking has helped clients maintain personal accounts, the same convenience and security is now extended to businesses and corporations for their very demanding banking needs.