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IRS Issues Favorable Ruling on WTP’s Like-Kind Exchange Program

New York (February 26, 2013)

By Michael Cohn

The Internal Revenue Service has released a favorable private letter ruling allowing WTP Exchange, an affiliate of WTP Advisors, to provide both like-kind exchange software and qualified intermediary services.

The IRS ruling indicated that WTP Exchange is permitted under the tax law to provide both LKE software and qualified intermediary services.  The ruling was issued last November, but WTP announced it on Monday.

“The IRS ruling provides companies with a level of certainty in an uncertain world,” said Ron Hodgeman, a tax attorney and partner at WTP Exchange, in a statement.

WTP noted that companies are cautious about implementing tax strategies when an unproven or poorly designed LKE program can lead to IRS audits and the assessment of penalties and interest.

“Even though tax-deferred exchanges have been a part of our tax law for over 90 years, we decided to obtain an IRS ruling around our solution to help put our clients at ease,” said Hodgeman.

Under Section 1031 of the Tax Code, no gain or loss is recognized when companies sell their business or investment property and acquire property that is like-kind. Equipment dealers, car rental companies and other organizations that routinely dispose of business assets can realize substantial benefits from an ongoing program of like-kind exchanges.

Since 2008, companies have reduced their current tax liability by taking advantage of bonus depreciation. But as bonus depreciation is phased out later this year, many unsuspecting companies will face skyrocketing tax bills. An LKE program can help them avoid these higher taxes.

“As the economy continues to struggle, our clients are interested in strategies that can help them increase cash flow and improve their profitability,” said Hodgeman. “An LKE program is one of the few proven tax solutions that can be relied on during these uncertain times, and the WTP Exchange fully-integrated solution provides benefits that can’t be matched by our competition.”

 

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