Final answer:
The statement is true. There are specific time limits for completing a delayed (non-simultaneous) exchange, typically within 45 days for property identification and 180 days for the acquisition of the replacement property under a 1031 exchange.
Step-by-step explanation:
The statement that delayed exchanges are allowed, but there are time limits on its completion is true. In the context of business or real estate, delayed exchanges refer to a method known as a 1031 exchange. This allows an investor to sell a property and then reinvest the proceeds in a new property while deferring all capital gain taxes. The Internal Revenue Code specifies two key time limits for a delayed exchange: the Identification Period and the Exchange Period.
The Identification Period is the timeframe within which a taxpayer must identify potential replacement properties, which is typically within 45 days of the sale of the original property. The Exchange Period is the time by which the replacement property must be acquired, which is usually within 180 days of the sale of the original property. These time limits are strict and must be followed precisely for the transaction to qualify as a 1031 exchange.