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Accommodator An accomodator is another term for a Qualified Intermediary. Actual Receipt Direct access to your exchange funds or other property. Receiving exchange funds during the exchange period will disqualify your exchange. (Also see Constructive Receipt) Adjusted Cost Basis The amount you use to determine your capital gain or loss from a sale or disposition of property. To determine the adjusted cost basis for your property, you must start with the original purchase cost. You then add any out-of-pocket expenses such as brokerage commissions, escrow costs, title insurance premiums, and other closing costs directly related to the acquisition , your cost of capital improvements and principal payments of special assessments (sewer and streets) to the property, and then subtract depreciation you have taken or were allowed to take, any casualty losses taken and/or any demolition losses taken. Balancing the Exchange A balanced exchange ensures that the taxpayer defers 100% of his or her taxes on capital gain and depreciation recapture. To achieve a balanced exchange 1) acquire a replacement property that is equal to or greater value than the relinquished property; 2) reinvest all of the net equity from the relinquished property in the replacement property; and 3) assume debt on the replacement property that is equal to or greater than the debt on the replacement property or contribute cash to make up the deficiency. Build-To-Suit Exchange A tax-deferred, like-kind exchange whereby the Qualified Intermediary and/or Exchange Accommodation Titleholder (EAT) acquires title and holds title to the replacement property on behalf of the Exchangor, during which time structures or improvements are constructed or installed on or within the replacement property. Also known as an Improvement Exchange. Boot Boot is something received by the taxpayer in the exchange which is not like-kind to the relinquished property. Boot is characterized as either "cash" boot or "mortgage" boot. Realized Gain is recognized to the extent of net boot received. Boot Netting Rules • Cash boot paid offsets cash boot received • Cash boot paid offsets mortgage boot received (debt relief) • Mortgage boot paid (debt assumed) offsets mortgage boot received • Mortgage boot paid does not offset cash boot received Business Assets Real property, tangible depreciable property, intangible property and other types of property contained or used in a business. Exchanging one business for another business is not permitted under INTERNAL REVENUE CODE Section 1031. However, taxpayers may exchange business assets on an asset-by-asset basis, usually as part of a Mixed-Property (Multi-Asset) Exchange. Capital Gain Capital gain is calculated as follows: total selling price of the relinquished property, less exchange expenses, less the relinquished property's adjusted basis. The adjusted basis is the original cost, plus the cost of capital improvements, less depreciation or cost recovery deductions. Capital gains may be subject to depreciation recapture and other rules of the internal revenue service.

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