Key Takeaways
- Both direct replacement properties failed—without a DST backup, the exchange had no recovery path.
- Total cost of failure: $64,970 in immediate taxes plus $140,263 in lost compound wealth over 10 years.
- A DST backup identification (costing $0 to identify) would have saved $64,970 in immediate taxes.
- Prevention cost ($700) versus failure cost ($205,000+) = 1:293 ratio—always identify a DST backup.
This track contains subscriber-only lessons
Explore free tracks in this area of study, or subscribe for full access.
Browse available tracks"Form 8824, Exchange Chain Integrity & IRS Audit Defense" is a Pro track
Upgrade to access all lessons in this track and the entire curriculum.
Test Your Knowledge
1.In a 1031 exchange failure case study, what is the most common failure cause?
2.What is the financial impact of a failed exchange on a property with $300,000 in total gain (including $80,000 in depreciation recapture)?
3.What prevention measure would most likely have avoided the exchange failure in a typical case study?