IRS Section 1031 has been part of the Tax Code since 1921. It is not some “Johnny-Come-Lately”, black-hat attempt to end-run the lawful payment of taxes.
Through a series of cases, a family named Starker (hence the often-used name “Starker Exchanges”) was able to get the concept of Exchanges expanded from “simultaneous” (sell and buy at the same time) to “delayed” (sell now, buy later).
The Tax Reform Act of 1984 “authenticated” the Starker Exchange by changing it from being “case law” to being “codified” in the regulations. There is nothing dangerous or adventuresome in doing a Starker Exchange if it is done correctly. The 1991 Regulations further describe the precise mechanism to be used, thereby making it even safer.
The “legal fiction” is that somehow the Taxpayer did not sell one property and buy another (although that is clearly what really happens), but rather he “exchanged” one “position” (ownership) in real estate for another “position”. If an exchange of position has occurred, not a “sale”, then the technical conclusion is no taxable event has taken place at that time – and hence no tax must be paid at that time.
The 1991 Regulations created the role of a Qualified Exchange Intermediary. This entity drafts all the documents necessary for a 1031 Exchange – and supervises the safe preservation of the monies involved and safely transferring them as needed. It is a perfect alignment for a transactional Attorney – especially one practicing real estate law.
At first blush, one might think the only source of revenue for a 1031 exchange service is the fees it charges. While those fees do matter, they are far from being the complete and profitable story.
What if you could legally earn interest on millions of dollars of other people’s money 24/7 and 365?! Now that is “leveraged income” in its purest form. It is a goose that continually lays golden eggs.
Between the sale of “the relinquished property” (Property “A”) and the purchase of “the replacement property” (Property “B”) in a standard deferred (Starker) exchange, the sale proceeds legally belong to the intermediary. And the intermediary can elect to earn interest on this money. In one way or another, this is how almost all 1031 Intermediary Services conduct their business and make it very profitable while saving taxes for their taxpayers and clients.
I am offering you the chance to acquire what, for all intents and purposes, is a turn-key "Business-In-A-Box”. Not unlike a franchise, you will receive all of what you need with accompanying support, and there is no “learning curve," no need for new employees or HR hassles, and an extremely modest upfront cost, which is not paid to me. (You will recoup these modest start-up costs with your very first Exchange.)
Here are some of the contents of your “Business-In-A-Box.”
• You receive a 1031 Education Manual that is written in plain English – not “LegalSpeak”. It tells you what you really need to know about 1031 Exchanges. And if you wish, you can give copies to your Taxpayer/Clients - and Gatekeepers (Attorneys and Brokers) who send you Exchange business. The contents of this presentation have received “rave reviews” from State Bar CLE seminars.
• You receive a battle-tested and proven Marketing GamePlan. As a solo Attorney - and without the benefit of some Title Underwriter affiliation or Bank sponsor – I built a 1031 Intermediary Service from scratch that earns me a significant six figure plus income. I did this by employing a proprietary tactic that my competitors didn’t think to do – and do not to this day. It took me from incremental growth to an explosion of more 1031 Exchange business. All of what I know and have perfected will be shared with you. And I will provide continuing “marketing mentoring”.
• This Marketing GamePlan includes a custom-prepared “Animated Explainer Video*” that will be used as the spearhead of an online email Marketing Campaign to your Gatekeeper referral sources. You also receive the complete strategy and “internet tools” for this Campaign. This Campaign drives Gatekeeper prospects to a custom-tailored Website I prepare for your 1031 Intermediary Service that will provide these Gatekeeper prospects with the compelling “complete story” of what you do – how you do it – and the benefits of a relationship with you.
• Money Safety is a critical component of a successful 1031 Exchange Service. I will link you to a highly reputable Trustee Bank with whom I have done 1031 Exchange business for decades. They know what to do and provide exactly what is needed. And they use the IRS-approved “Dual Signature Account” structure that insures Money Safety for the Taxpayer/Client – and satisfies Gatekeepers when they recommend you.
• My own Exchange Support Company provides ALL of the necessary Exchange Documents for each Exchange as it occurs – and distributes copies to all transaction parties. These Documents have passed muster in several IRS audits.
• One of THE most important features of your “Business-In-A-Box” is you, your Gatekeepers and Taxpayer/Clients themselves will all have personal access to me as their “Exchange Guru”. Any questions can be answered – and any issues resolved.
• And in addition to my decades-long 1031 Exchange experience, as an Attorney, I have also spent decades in the trenches doing the “real world real estate deals” that underlie an Exchange. This valuable experience is something that many “cloistered Exchange bureaucrats” – who never practiced a lick of law in their lives - simply don’t have. And it can sometimes make the difference in overcoming some problem and preserving the use of the 1031 Exchange technique.
The business relationship we will have is simple and straight-forward. The Exchange Service (an LLC – or whatever legal entity you prefer) will be solely-owned by you. My relationship with your Exchange Service will be that of an Independent Contractor. This means you have no new employee or HR issues to deal with. On your end, you can operate the Exchange Service with as few as one person. (I will need someone with whom to coordinate my duties as the primary Exchange functionary – and someone on your end will be needed to implement some of the Marketing GamePlan I will provide.) But this person can be you or one of your current support staff.
Our “financial arrangement” is equally simple and straight-forward. We split gross revenues 50/50. Each of us pays our own expenses – which for you will be minimal – producing a very high ROI. We will occasionally experience more “exotic” Exchanges – like Reverse Exchanges and Build-To-Suit Exchanges. These command a much higher fee than standard Delayed Exchanges (they are usually in the $6,000 to $9,000 range) and require much more time on my part to produce many more documents and orchestrate all the intricate details. So, on these few Exchanges, the fee split is 60/40 in my favor.
I intentionally chose the phrase “Business-In-A-Box” for this presentation because it artfully captures the essence of my Offer. You receive everything you need from one reputable source and 85% of it in an “already done for you” manner.
You completely avoid an otherwise significant “learning curve” and all the accompanying challenges and headaches of starting a new business from scratch – and then administering the details. (No pill I could give you will make you totally “Exchange Service Savvy” in a nano-second.)
You can be “up and running” and earning money in less than four weeks – and in time, that money can grow to be a decent source of ancillary income for you – or even become your sole business activity – as it has for me. The potential is limited only by your own efforts.
And as I said at the beginning, you can be in the 1031 Exchange Service business for yourself, but not by yourself. By affiliating with me, your overhead will be less than with a more standard business structure – and your profits and the ease of achieving them will be greater. My role is strictly performance-based. You only owe me money when there is money generated from Exchanges with which to pay me.
And all of this is “win-win” in anyone’s book.