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News Archive: Ask the Professional-Is the IRS challenging the use of Tenancy-In-Common (TIC) interests in like-kind exchanges (Sec.1031)?
 For Immediate Release:
February 08, 2008
Tom Neff, Tax Manager
tneff@rina.com
510-893-6908
475 14th Street, Suite 1200
Oakland, CA 94612
www.rina.com
Q. Is the IRS challenging the use of Tenancy-In-Common (TIC) interests in like-kind exchanges (Sec.1031)?
A. Yes, the IRS is considering in some instances whether a TIC more closely resembles a partnership, making it ineligible property for purposes of a deferred exchange. The primary issue, which is whether the parties actually intended to and did in fact join together for an “undertaking of an enterprise,” will hinge on the following factors:
the agreement between the parties, and whether its terms are being followed.
control over income and capital, and the right to take distributions.
whether the parties share in net profits and losses.
whether the business was conducted as a joint venture.
whether separate books were maintained.
Careful consideration needs to be given to each of these factors in structuring an exchange of
real property held as a TIC.
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