Escrow & Title
A Connecticut property is being purchased in a '1031 exchange.' The seller (exchanger) uses a 'qualified intermediary' (QI). The role of the QI is to:
AProvide the IRS with information about the exchange
BHold the exchange proceeds after the relinquished property sale and use them to purchase the replacement property, ensuring the exchanger never has 'constructive receipt' of the funds✓ Correct
CApprove the replacement property for IRS purposes
DProvide a tax opinion that the exchange qualifies
Explanation
In a 1031 exchange, the qualified intermediary (QI) holds the sale proceeds after the relinquished property closes and uses them to acquire the replacement property. The exchanger cannot have actual or constructive receipt of the proceeds between the sale and the reinvestment, which is the QI's critical function.
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