Real Property or Services?
The transfer of real estate in exchange for "services rendered" in the construction of Replacement Property will not fall within the non-recognition provisions of Code Section 1031.
The Regulations provide special rules for the identification and receipt of Replacement Property where the Replacement Property is not in existence or is being produced or constructed at the time the identification is made.
Constructed property will be treated as identified if a legal description of the land is provided with "as much detail as is practicable" for construction of the improvements.
Any construction that occurs after the Replacement Property is received by the Taxpayer will not be deemed qualifying Replacement Property for purposes of the exchange.
If identified Replacement Property is personal property to be produced, production must be completed on or before the date the property is received by the Taxpayer.
If production of the personal property is not complete at the time the property is transferred to the Taxpayer, the personal property will not be deemed “substantially the same” as the property that was identified.