What time is it?

It’s time to talk taxes and crowdfunding and to consider how we might take a concept that has been around for over 100 years and apply it to regulated investment #crowdfunding (#RIC).

First, a brief American history lesson.

The Revenue Act of 1921 authorized the first tax-deferred exchange, allowing investors to exchange securities and non-like-kind property. Over time, changes in tax legislation and interpretation by the courts limited the scope of what eventually became known as “Section 1031” of the Internal Revenue Code (IRC) to apply only to like-kind property and more specifically, real estate.

For those unfamiliar with 1031 exchanges, they are a tax-deferred exchange of like-kind property used for investment or business purposes. This type of exchange allows investors to defer paying capital gains taxes on the sale of a property by using the proceeds to purchase a similar property.

The key tenets of a 1031 exchange are:

- Only like-kind properties used for inves...more