Key Takeaways
- A running basis schedule connecting every exchange in the chain is the most critical document in multi-exchange investing.
- Annual basis reconciliation (30-60 minutes) catches discrepancies before they compound into irrecoverable errors.
- Three chain-breaking scenarios: taxable sale, personal use conversion, and lost documentation.
- Digital copies with cloud backup and redundant storage (CPA, attorney) protect against documentation loss.
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Test Your Knowledge
1.What is the primary documentation challenge in managing a chain of multiple 1031 exchanges?
2.If a chain of 1031 exchanges breaks (one exchange fails in the middle), what happens?
3.What basis reconciliation should be performed after each exchange in a chain?