We'll loop in your CPA is a phrase that shows up in a lot of sourcing pitches and rarely means much in practice. What actually needs to happen is a specific document handoff, on a specific timeline, so the investor's CPA can evaluate boot exposure and depreciation recapture before the exchange decisions are locked in, not after.
What A Vague Coordination Promise Actually Skips
A firm that says it will keep the CPA informed but cannot describe what documents get sent, on what schedule, is describing a phone call, not a coordination process. We build a specific handoff: closing statements, rent rolls, debt payoff figures, and the identification notice all go to the CPA at defined points in the timeline, so the tax review happens alongside the exchange rather than as an afterthought once the closing has already happened.
Boot Is A Math Problem The CPA Needs Real Numbers For
Boot generally arises when the investor receives cash or reduces debt without a matching increase elsewhere, which can trigger recognized gain even inside an otherwise valid exchange. Whether a specific Memphis transaction creates boot depends on exact numbers, the relinquished sale price, the replacement purchase price, and the debt on both sides, not a general rule of thumb. We are not offering tax advice here. We make sure the CPA has the actual closing figures early enough to run that math before the replacement closing, not the week after.
We also make sure the CPA sees the full picture of any cash the investor plans to pull out at closing for reasons unrelated to the exchange itself, since even a modest cash-out can create boot exposure an investor did not anticipate if they were focused only on the larger replacement property purchase. Flagging this early, before the replacement property is under contract, gives the CPA room to model the actual tax consequence rather than discovering it after the closing statement is already final.
Depreciation Recapture Does Not Disappear, It Carries Forward
A like-kind exchange defers gain, it does not erase the depreciation recapture question. The investor's accumulated depreciation on the relinquished property carries forward into the replacement property's basis calculation, and that carryforward affects future depreciation schedules and eventual tax exposure. This is squarely the investor's CPA's call to make, and our job is making sure they have the depreciation schedule and closing statements in hand rather than reconstructing them after the fact.
Entity Structure Questions That Come Up Mid-Exchange
Some Memphis investors hold the relinquished property in an LLC and want to take title to the replacement property differently, or add a partner, or change ownership percentage. Whether that is workable inside the exchange rules is a question for the investor's CPA and attorney, and it needs to be raised early, since the taxpayer that sold the relinquished property generally needs to be the same taxpayer acquiring the replacement property for the exchange to hold up cleanly.
This question comes up often enough with Memphis investors holding property through a single-member LLC who want to add a spouse or business partner to title on the replacement property. Whether that addition creates a problem depends on how the relinquished property was held and how the new ownership is structured, and it is exactly the kind of question that needs raising during the search phase, not after a replacement property has already been identified and the closing date is fixed.
What The Coordination File Actually Contains
Before we call CPA coordination complete for a given exchange, the file includes:
- Closing statement for the relinquished property, delivered to the CPA promptly after closing
- Debt payoff and replacement financing figures, so boot exposure can be checked against real numbers
- Depreciation schedule for the relinquished property, forwarded for the recapture and basis carryforward analysis
- The identification notice and any entity or title questions flagged early, not discovered near day forty-five
- A running question log the CPA and attorney can add to as new documents arrive
Common 1031 Exchange Questions
What does real CPA coordination look like versus a vague promise?
A specific document handoff on a defined schedule: closing statements, debt figures, and the identification notice sent to the CPA at set points, rather than a general assurance that the CPA will be kept in the loop.
Can this service tell you whether your exchange will trigger boot?
No. Boot depends on exact numbers and is a determination for the investor's CPA. We make sure the CPA has the actual closing and financing figures early enough to run that analysis before the replacement closing happens.
Does the exchange erase depreciation recapture exposure?
No. Recapture is deferred and carries forward into the replacement property's basis, which affects future depreciation and eventual tax exposure. The investor's CPA needs the depreciation schedule to evaluate this properly.
Can you change the ownership entity between the relinquished and replacement property?
That is a question for the investor's CPA and attorney, since the same taxpayer generally needs to acquire the replacement property. We flag entity or title questions early so there is time to address them before they become a problem near the identification deadline.
Is this coordination work the same as tax advice?
No. This work organizes documents and timelines so the investor's own CPA and attorney can give tax advice with complete information. It does not substitute for their analysis or recommendations.
