Can a trust beneficiary complete a 1031 exchange after receiving a tenancy-in-common (TIC) interest due to trust termination? A recent 2024 IRS Private Letter Ruling provides insight—and reassurance—for taxpayers navigating this scenario.

The ruling addresses a situation where an irrevocable testamentary trust was required to dissolve and distribute its assets following a contingent event. The IRS ultimately permitted a 1031 exchange by the beneficiary of the trust, emphasizing that the property retained its investment character, even after the “drop” into TIC ownership.

This guidance may offer peace of mind to those involved in trust-based ownership or succession planning, especially where a real estate asset is part of the estate.

Read the full analysis by James T. Walther, Esq., LL.M.