If a 1031 is completed and the buyer comes back a few months after the sale and says the property description is wrong (not just due to a typo in description, but a lay-out error) and the new configuration creates a 5% difference in acreage content and location, can the description simply be corrected by a correction deed without flawing the 1031?  They would not be asking for any price adjustment, so the sales price under the 1031 would remain the same.

Client has a right-of-way that was 1031'ed in 2008.  The purchaser has come back to client (post 1031) wanting to re-route a small portion of right-of-way.  This would create a deviation of the description that we 1031'ed by about 5%.  The client would like to accommodate them by signing an Amendment to the Right-of-Way Agreement with no funds adjusted.

Will this negatively affect the exchange?

Your thoughts are greatly appreciated,

Billy Boutwell, CPA

Mississippi

Hi Billy,

No, I don't think it will create any issues.  In fact, there is an example in the actual 1031 exchange Treasury Regulations where the taxpayer identified two lots and ended up acquiring 75% of those two lots and then part of the lot next door.  So, it would appear that acquiring at least 75% of what was identified would still qualify as long as the taxpayer also traded equal or up in value and reinvested 100% of their proceeds.  I think the 5% variation would fall within this example.

Thanks,

Do you happen to know the Treas. Reg.

Hi Billy,

I can't recall the specific Treas Reg.  I'll post if I can find it off hand.