The reporting of exchange transactions is different from the reporting of sales in only two areas.
- Gross proceeds
- The checkbox in Box 4 of Form 1099-S
The regulations state that in the event of an exchange the cash or cash equivalent (known as "boot") is to be shown as the gross proceeds rather than the sales price. Unfortunately, particularly in the case of delayed or deferred exchanges under §1031 of the Internal Revenue Code, it is not always known what will be the boot amount. Neither the settlement agent nor the transferor (exchangor) will necessarily know the boot amount at the time of closing.
If the boot amount is unknown at the time the input sheet is completed, the gross proceeds box should be the total consideration.
If the transaction involves a delayed or deferred exchange, the transferor for Form 1099-S purposes is the exchangor and not the accommodator.
Check the Box
For exchange transactions, check the box to indicate that other property or services will be received by the transferor as part of the consideration.
Additional topics:How to Fill Out the Input Sheet
Who is Subject to the Reporting Requirements
Which Transactions are Subject to the Reporting Requirements
Sales of Principal Residences
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