Posted by ray@lcorn on June 02, 2009 at 10:24:24:
In Reply to: Re: One more thought posted by Mike on May 31, 2009 at 05:50:31:
Mike,
You're so confused I don't know where to start...
First, a flip (generally defined as a property held less than one year with the intent to resell, i.e. not held for investment) does not qualify for a 1031 tax-deferred exchange, which is what we were tallking about above.
Second, your accountant should lose his license if the advice he gave you was for a true flip, and doubly so if it is in fact investment property. A 1031 exchange must involve "like-kind property" (see article referred to below). "Stocks, bonds, bank cds" etc. do not qualify as like kind and would not be elegible even if the deal were not a flip.
Last, the depreciation recapture tax applies only to the sale of long-term assets qualified as capital gains if a 1031 is not elected. A flip is cannot be depreciated as it is considered dealer inventory, therefore recapture does not apply.
For 1031 basics, see my article at http://www.creonline.com/articles/art-159.html
ray
p.s. and get a new accountant