The Internal Revenue Service does not have authority over the qualified intermediaries who assist taxpayers with completing like-kind exchanges, exposing taxpayers to financial risks, according to a new report.
Under normal circumstances, when a taxpayer sells business or investment property, tax must be paid on the gain at the time of the sale. Qualified intermediaries receive and hold the proceeds of a sold property and then disburse the funds to acquire a replacement property, thereby deferring payment of the capital gains tax and saving the taxpayer a tax obligation.
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