Question

Bob Roman, the major owner of an S corporation, approaches you for some tax planning help. He would like to exchange some real estate in a like-kind transaction under § 1031 for real estate that may have some environmental liabilities. Prepare a letter to Bob, outlining your suggestion. Bob’s address is 8411 Huron Boulevard, West Chester, PA 19382.

Answer 1

Bob Roman should consider the environmental liabilities associated with a like-kind transaction meticulously, obtaining a thorough environmental assessment and consulting with an environmental law expert to mitigate risks and comply with regulations.

Step-by-step explanation:

Dear Mr. Roman,

I am reaching out to discuss the potential like-kind transaction under § 1031 that you are considering. It is prudent to carefully evaluate the environmental liabilities associated with the real estate you are looking into. Such liabilities can lead to significant unforeseen expenses and legal complications, potentially affecting the financial outcome of your exchange.

If you proceed with the transaction, I recommend obtaining a comprehensive environmental assessment of the property to fully understand the scope of any potential liabilities. Additionally, consider consulting with an environmental law expert to mitigate risks and ensure compliance with relevant environmental regulations. Structuring the exchange to include contingencies or warranties from the seller regarding environmental conditions may also be advisable.

Please let me know how you wish to proceed, and I would be happy to assist you further.

Best regards,

[Your Name]

[Your Contact Information]