Bankers Exchange Services

WALNUT CREEK, Calif.–(BUSINESS WIRE)–Community Bankshares, Inc. (“CBI”), the holding company for Community Banks of Northern California (“CBNC”), and Bay Commercial Bank (OTCBB:BCML – News) (“BCB”) announced today the signing of a purchase and assumption agreement transferring a full-service branch office in Castro Valley, California, including certain assets and liabilities of CBNC to BCB. The transaction is subject to customary closing conditions, including receipt of applicable state and federal regulatory approvals. The transaction is intended to be completed during the second quarter of 2009.

According to Mickey Moore, President/CEO of CBNC, “This was a difficult decision for CBNC as the bank has enjoyed great customer loyalty in the Castro Valley branch, however, the sale of our Castro Valley branch will allow us to continue our focus on the Central Valley and our new Sacramento office. We are very confident that Bay Commercial Bank will continue the excellent customer service and community banking focus that they are well known for providing to their existing customers. We expect only good changes to come from this alliance with a very strong bank.”

George Guarini, CEO of Bay Commercial Bank stated “We are excited about welcoming the Clients and Employees of the Castro Valley Office into the Bay Commercial Bank family. At Bay Commercial Bank we say “It’s About the Client”. We believe it, we take it seriously and we show it. We look forward to meeting our new family members.”

About Community Bankshares, Inc. and Community Banks of Northern California:

Community Bankshares, Inc. is a multi-bank holding company serving the states of Colorado and California. Banking subsidiaries include Community Banks of Colorado, Citizen’s State Bank of Cortez, and Community Banks of Northern California. CBI also provides mortgage services through Affiliated Financial Groups, Inc. and Banker’s Mortgage Corporation.

Community Banks of Northern California is the only bank chartered in and headquartered in Tracy with full service branches in Tracy, Lathrop and downtown Sacramento.

About Bay Commercial Bank:

The Bank offers a full range of loan and deposit products and services to businesses and their affiliates throughout the Bay Area. The bank also offers 1031 exchange services. Its headquarters office is located at 1280 Civic Drive, Suite 100, Walnut Creek, California. The Bank has one branch at 155 Grand Ave, Oakland, California. Bay Commercial Bank is a member of FDIC and is an Equal housing lender. Bay Commercial Bank is traded on the bulletin board under the symbol BCML.OB and the Bank can be found at www.baycommercialbank.com. Bankers Exchanges Services can be found on line at www.bes1031.com.

Contact:
Community Bankshares, Inc.
Don Woods, 720-529-3338
Chief Executive Officer
Email: dwoods@cobnks.com
or
Bay Commercial Bank
George J. Guarini, 925-476-1810
Chief Executive Officer
Email: george.guarini@baycommercialbank.com

The Reverse Exchange

Background and Overview
A forward deferred exchange is the most common structure for a 1031 tax-deferred exchange. It is, quite simply, the sale of the relinquished property by the taxpayer followed by the purchase of qualifying replacement property by the taxpayer. The taxpayer has 180 days from closing on their relinquished property to take title to the replacement property and must identify their prospective replacement properties in the first 45 days.

A reverse exchange, by contrast, is used most commonly where the taxpayer must acquire the replacement property for their exchange prior to the sale of their relinquished property.

In situations where the taxpayer cannot close on the sale of their relinquished property prior to closing on the purchase of the replacement property, a properly structured and completed reverse exchange may provide the taxpayer with all the tax deferral benefits of a “normal” forward exchange. The IRS has created safe harbor provisions for reverse exchanges that use the structures described below.

Structuring a Reverse Exchange
A reverse exchange requires the use of an Exchange Accommodation Titleholder (EAT). The role of the EAT is to take and hold title to one of the properties involved—either the taxpayers’ relinquished property or the replacement property. The reason is that the taxpayer is prohibited by the IRS’s 1031 rules from being on title to both properties at the same time.

Using the EAT, the reverse exchange can be accomplished using one of the two following structures:

Exchange First, or Parking the Relinquished Property
The EAT takes title to the relinquished property as the substituted buyer. This is also referred to as “parking” or “warehousing” the relinquished property. Since the taxpayer and the EAT are simulating a real sale, the taxpayer must estimate what they would sell the property for if they had a “real” buyer and must also estimate what they would expect to receive in net proceeds, also known as exchange equity, if a real sale had occurred.

The exchange equity is then used immediately to buy the replacement property and the exchange is complete. The EAT will stay on title to the taxpayer’s relinquished property until the “real” buyer is ready to close. Title is then transferred from the EAT to the buyer and the net proceeds from that sale are used to reimburse the taxpayer for the exchange equity they had advanced.

Exchange Last, or Parking the Replacement Property
In this structure, the EAT takes title to the replacement property using funds provided by the taxpayer. The taxpayer holds a note and deed of trust to the property as the “lender.” Title to the property is “parked” until the relinquished property can be sold. When the relinquished property is sold, it is treated as the first part of the exchange. The seller’s proceeds are sent to the intermediary as exchange funds. These funds are then used to “buy” the replacement property held by the EAT and transfer title to the taxpayer.

Benefits
As mentioned above, a successfully completed reverse exchange offers the same tax deferral benefits as a forward exchange. The taxpayer is able to defer the recognition of gain associated with the sale of the relinquished property.

There are also some taxpayers who feel that securing the replacement property first relieves the burden imposed by the 45-day identification rule.

Disadvantages
Where the EAT takes title to the relinquished property, the taxpayer must advance funds without having actually sold their relinquished property. There is also some guesswork in estimating what the actual sales price and net proceeds will be. If the taxpayer underestimates and receives more in equity or price when the property actually sells, they may have some unexpected gain. The relinquished property must actually be sold within 180 days or the exchange will likely fail.

Where the EAT takes title to the replacement property, the taxpayer must also provide funds to purchase the replacement property. They do not yet have the proceeds from the sale of their relinquished property so they will need to have funds from another source, obtain a bridge loan, or accomplish the often difficult tasking of finding a lender who is willing to finance the purchase where the EAT will be taking title rather than the taxpayer.

In either type of reverse exchange, the taxpayer should consider whether their tax liability outweighs the significantly higher costs of completing a reverse exchange. The additional costs include the EAT fees, intermediary fees, and two sets of title and escrow fees for both title transfers, as well as applicable city and/or county transfer taxes.

There are other options to undertaking a reverse that the taxpayer might consider. One option is a properly structured lease-option arrangement that allows the taxpayer to secure the replacement property while waiting for their relinquished property to sell. The taxpayer could also negotiate with the seller of the replacement property to extend the closing by offering a larger and/or non-refundable deposit.

There are many benefits to using a reverse exchange transaction. While this article attempts to briefly describe the reverse exchange, it is very important that any taxpayer entering into an exchange first consult with a trusted tax advisor to evaluate their options and ensure they can comply with the strict requirements of IRC Section 1031.

______________________________________________

1. If the taxpayer is unable to sell the relinquished property within the 180 day period there are several possible tax implications: If the replacement property had been parked, the replacement property will be deeded back to the taxpayer by the EAT and the taxpayer will be treated as having purchased the parked property on that date. The taxpayer may want to disregard the entire failed QEAA transaction and the taxpayer will be treated as having simply acquired another piece of real estate.

If the relinquished property had been parked, and the taxpayer has already filed a tax return reporting the exchange and a carryover basis in the replacement property, it would seem the transfer of the relinquished property back to the taxpayer from the EAT would give the taxpayer a new fair market value basis in the relinquished property, or can the taxpayer disregard the parking arrangement and simply treat the replacement property as another piece of real estate they have acquired? The guidelines contained in IRS Revenue Procedure 2000-37 do not answer these questions.

reprinted by permission of Alison King, Esq.

Welcome to the February 4, 2009 edition of 1031 exchange.

KCLau presents Redefine Retirement: Lifestyle Design of the New Rich posted at KCLau’s Money Tips, saying, “An article about retirement, deferred Retirement versus mini-Retirement, income relativity and how to use the shortest to earn the income that u need.”

David presents Budgeting vs. Allocating Funds: There’s A Difference posted at Personal Finance Ology, saying, “The difference between budgeting and allocating your money is not a trivial one, but is often overlooked. It is prudent to both budget and allocate your discretionary funds so that you can stretch you dollars further!”

KCLau presents Procrastinator, plucker, plotter, and prober posted at KCLau’s Money Tips, saying, “Recently I was reading the book titled “The Number: What do you need for the rest of your life and what will it cost?”
I give you a rundown on wat the book has to offer”

Ralph Jean-Paul presents How To Make Important Decisions Quickly posted at Potential 2 Success, saying, “Quick decision making is critical in just about every aspect of life. Every decision you make produces a result. In every line of business, quick decision making is crucial for success.”

investing strategies

Smart Investor presents When Not To Invest In Stocks | The Stock Investor – Stock Advice And Tips posted at The Stock Investor, saying, “Everyone is always telling you to get into the market. What are some reasons you should stay away from stocks?”

Raymond presents Free Quicken Online Review and Quicken 2009 Discount Coupon Codes posted at Money Blue Book.

mortgage/financing

Den Levin presents Why Credit Is So Important | Credit Makes The World Go Round posted at Credit Makes The World Go Round, saying, “Lack of credit affects everyone both directly and indirectly.”

KCLau presents Best of KCLau’s Money Tips 2008 posted at KCLau’s Money Tips, saying, “A run down of the best KCLau’s Money Tips 2008″

Joe Manausa presents Tallahassee Foreclosure Report | Tallahassee Real Estate Blog posted at Tallahassee Real Estate Blog, saying, “There is plenty of news in the national media about foreclosures. From everything that I have read, I suspect for every 100 foreclosures that have and will hit the real estate market during our current housing crisis, we have only seen 2 or 3. The bulk of the foreclosures have yet to hit the market.”

real estate market

Joe Manausa presents January 2009 Housing Market Trends | Tallahassee Real Estate Blog posted at Tallahassee Real Estate Blog, saying, “The continuation of the three-year-old bear market in real estate has brought many people forward to comment on the condition of the real estate market. It seems for everybody with an opinion, there are an equal number of theories about where the housing market is going. So, not to be left out of the crowd……. I thought I would chime in with an (updated) opinion of my own.”

Haydee Sampiano presents Torrance Real Estate Market Recap for 2008 posted at HHC South Bay Real Estate News, saying, “The final numbers for the Torrance real estate market in 2008 are in and although it was a tough year for home sellers there were some interesting market developments towards the end of the year that may indicate a brighter 2009 for sellers.”

Haydee Sampiano presents Manhattan Beach Real Estate Market Recap for 2008 posted at HHC South Bay Real Estate News, saying, “The final numbers from the South Bay Association of Realtor for the Manhattan Beach real estate market in 2008 reveal just how tough a year it was for home sellers. The year started with a less than stellar 14 home sales (single family homes, condos/townhomes, and residential income) for the month of January and ended with 14 sales in December.”

Raily Arena presents Tips to Increase Your Chance of Selling Your Home posted at How to Sell Your Own Home.

Raily Arena presents Tips To Get You Started On Selling Your Home posted at How to Sell Your Own Home.

Ken presents Home buying market concerns posted at thehumblecoach.com.

transaction tips

Joe Manausa presents Real Estate Sales Success | Tallahassee Real Estate Blog posted at Tallahassee Real Estate Blog, saying, “By tracking movement of inventory in the MLS, one is able to tell if the market is expanding or contracting, and whether property values are rising or falling. With this information in hand each month, you can best understand a great strategy for selling a home (or one for buying a home).”

That concludes this edition. Submit your blog article to the next edition of 1031 exchange using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: 1031 exchange, blog carnival.

Bauer Financial has been analyzing and reporting on banks and credit unions for 16 years.  Financial institutions can not pay to be ranked nor can they be excluded.   The information used to determine the ranking is compiled directly from reporting done by federal regulators.

In July of last year I wrote about “Knowing Your Bank“.  I mentioned “Tier One Capital Ratio” as being one of the criteria regulators use to measure the health of a bank.  Regulators require banks to maintain a tier 1 risk-based capital ratio of 4%, a tangible capital ratio of 4% for a total risk-based capital ratio of at least 8%.  Bay Commercial Banks total risk-based capital ratio is 17.16%.

Bauer Financial recommends all institutions they rank with either 4 or 5 stars.  What this means to them is that the institution is safe, financially sound and operating well above its regulatory capital requirements. 

What this means for the client is piece of mind.  Any client who deposits funds with Bay Commercial Bank or Bankers Exchange Services can be assured their funds are secure.    

To open an account contact our office at (877)989-1031.  We facilitate 1031 Exchange transactions nationwide.

Welcome to the December 31, 2008 edition of The 1031 Exchange Carnival.  This is the last edition of the 1031 Exchange Carnival for 2008.  We will host our monthly carnival again each month in 2009 starting with our first edition which will post on Wednesday, February 4th.  Thank you to everyone who has submitted posts to our blog we have really enjoyed them and know our readers have as well.  Keep them coming in ’09′.

KCLau presents How to manages monthly cash flow posted at KCLau’s Money Tips.

KCLau presents Christmas On A Budget posted at KCLau’s Money Tips.

investing strategies

Michael Cohen presents I’m Betting On Oil posted at Stock Investing.

Robert Brus presents Blog | posted at The Site Rush Preview.

Sandy Naidu presents Bernard Madoff’s Ponzi Scheme posted at FutureNestEgg.

Rob presents 20 Real Estate Investing Tips to Becoming a More Profitable Real Estate Investor posted at Two Wise Acres.

Joe Hayes presents Forex Tips updated Sat Nov 15 2008 12:13 pm CST posted at Restoring Your Finances and Your Faith.

Gerald M. presents How Trickle Down Affects You posted at Recession Money Matters.

Joshua Dorkin presents 1031 Exchange into Oil and Gas Royalties posted at Real Estate Investing For Real.

Michael Cohen presents Are TheStreet.com Ratings Great Contrarian Indicators? posted at Stock Investing Tips, saying, “Are snapshot ratings on sites like thestreet.com good indicators of what NOT to do?”

Raymond presents Review Of E*Trade Bank High Interest Savings and Checking Accounts posted at Money Blue Book.

Raymond presents Review Of EverBank Savings and Checking posted at Money Blue Book.

millionaireblog presents Act quick if you want to buy Gold or Silver posted at millionaire blog .co.uk, saying, “Now is the time to invest in bullion. Learn more about the demand for Gold and Silver over at Millionaire Blog where Chris talks about how you need to move fast in order to make a profit in 2009.”

real estate market

Joe Manausa presents Real Estate Supply And Demand | Tallahassee Real Estate Blog posted at Tallahassee Real Estate Blog.

Pinyo Bhulipongsanon presents Five Secrets to Successful Real Estate Investing Partnerships posted at Moolanomy.

Joe Manausa presents REAL ESTATE TRENDS WORTH WATCHING | Tallahassee Real Estate Blog posted at Tallahassee Real Estate Blog, saying, “The MLS is the only source of information that directly ties supply to demand, so I find that it is important to keep an eye on this set of information on a daily basis. The most important information is new listings, new sales, new failures, and new pendings (homes put under contract), and track these as an “average” or trend over time.”

mortgage/finance

 Junior presents Does The Big Three Crisis Mark The End Of Big Labor posted at Car Commentary.

tax implicatgions

Credit Shout presents Tax Benefits for the Middle Class: What You Should Know posted at CreditShout.

transaction tips

Erica O’Leary presents Home Improvement posted at Denisolead’s Blog.

Denis O’Leary presents Bathroom Remodel posted at Home Improvement.

Denis O’Leary presents Kitchen Remodel, Martinez, CA posted at Home Improvement.

Denis O’Leary presents A new top 10 list of Resolutions posted at LEAD Construction, saying, “10 ideas for a New Years Resolution.”

That concludes this edition. Submit your blog article to the next edition of 1031 exchange using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Questions about 1031 Exchange, give Bankers Exchange Services in Walnut Creek, CA a call (877)989-1031 or visit our website at www.bes1031.com

Technorati tags: 1031 exchange, blog carnival.

The Federation of Exchange Accommodators published a member update today addressing the growing concerns in the 1031 industry.  This information is disturbing and unfortunate.  Many exchange companies have been unable to survive during the current financial crisis being felt throughout our nation.

This information further strengthens the notion of how important it is to thoroughly vet your 1031 company before making the decision to have your funds placed in their care.  Here are the questions you should ask and the answers you are looking for:

1.  Are the exchange accounts segregated?  The answer should be YES, there is never a reason to comingle exchange funds with operating accounts or other exchange accounts.

2.  How are the exchange funds invested?  The answer should be in FULLY LIQUID ACCOUNTS, such as certificates of deposit, cash management, working capital, money market accounts, bankers acceptances or U.S. obligations.

3.  If having all of your exchange funds FDIC insured is important then you need to ask if the company is participating in the Temporary Liquidity Guarantee Program offered by the FDIC.  This program will ensure any amount of funds through a bank.  Certain restrictions apply so be sure to get all the details.

If you would like more information on 1031 Exchange give Bankers Exchange Services in Walnut Creek, CA a call (877)989-1031.  We are a bank owned intermediary.  We segregate all exchange funds.  We deposit all funds into money market accounts.  We are participating in the Temporary Liquidity program.

There has been a lot of press recently about the closure of Land Americas 1031 exchange company.  In an effort to keep the public informed and help any clients who are caught up in the untimely and unfortunate circumstances we have included a link to the site where claims can be filed. 

We hope this will be of help to those who need it.  The Federation of Exchange Accommodators (FEA) is also diligently attempting to request some sort of tax relief for those affected by this situation.

For those who have questions regarding 1031 tax deferred exchanges please feel free to contact our office directly at (877)989-1031

Welcome to the December 3, 2008 edition of 1031 exchange.

KCLau presents Case Study: Financial Goals of a Malaysian working in Singapore posted at KCLau’s Money Tips, saying, “Subscribe to my Newsletter to receive the Top Money Tips for Malaysians ebook.

What you will get:

* Top Money Tips e-book
* Budgeting e-book (a week after signing up)
* Insider’s tips not published here”

KCLau presents My Greatest Financial Fears posted at KCLau’s Money Tips, saying, “Everyone will encounter several personal fears as they go through their life phases. There is one fear which most of us will definitely have to deal with and that is financial fear. I have listed down below several financial fears that the majority of us will encounter.”

imarketing4s presents Cheap Debt Consolidation: Regain Your Financial Freedom posted at Free Debt Consolidation: Qualified Financial Management.

imarketing4s presents How Do I Know If I am Eligible For Student Loan Debt Consolidation? posted at Free Debt Consolidation: Qualified Financial Management.

KCLau presents Buy term and invest the difference posted at KCLau’s Money Tips, saying, “In this post, I will share my view about the reality and practical part of making use of this well-known strategy of buying term and investing the difference.”

KCLau presents If either one of the joint-account holder dies, who gets the money? posted at KCLau’s Money Tips, saying, “Let’s say you have a joint account with your spouse in a local bank. Due to an unforeseen accident, your spouse passed away (touch wood). Are you entitled to withdraw all the money in the account, say RM100k? The answer is not simply a “yes” or “no”. It actually depends on the bank’s rules and regulations. What I learn is that there are three possibilities.”

escrow/settlement

Debt Wizard presents Credit Cards- What To Look For posted at Money Help, saying, “The right credit card for you depends on your spending habits and if you are able to fully pay off your credit card each month.”

investing strategies

Investing Angel presents Investments To Avoid posted at Stock Tips, saying, “Some investments to avoid – especially in the coming recession!”

Scott Miscall presents Investment Property and Fixer Upper Homes posted at Should you Consider Hard Money Finance?, saying, “Hard money finance can be a means to an end for some people and it can be beneficial. But, it really should be thought of as a last resort and not something to bank on for a long term solution.”

Market Breaker presents It?s Been A Brutal Year posted at Stock Investing Tips, saying, “This year has been the worst year for the stock market since the Great Depression.”

Jayson Gibson presents Hope for Homeowners Act of 2008 ?What’s At Stake? posted at New Homes Section Blog, saying, “Information about the Hope for Homeowners Act of 2008. Details about problems in our current economy and how each problem relates to the Hope for Homeowners Act of 2008.”

Investing Angel presents Learning Financial Planning through Asset Allocation » Free Stock Market Investing Tips posted at Stock Tips, saying, “Some ways to learn about financial planning.”

The Fund investor presents Bear Market Mutual Funds posted at Mutual Fund Investing Tips, saying, “The one type of mutual fund investor that has made money in 2008 are those that have been investing in inverse mutual funds”

Lawrence T. presents Margin Loan | Types Of Loan – Types Of Loans posted at Types of Loans, saying, “A margin loan may be a good way of paying off credit card or as a source for other financing needs. Margin loans need to be used carefully though, since you want to avoid a margin call.”

William L. Exeter presents Keeping Wealth Just As Important As Making It posted at The 1031 Exchange Institute, saying, “Keeping wealth is just as important as making it.”

Lauren Rose presents Practicing in the Forex Market posted at Stock Markets Investment, saying, “Why you start practicing forex trading by playing many online games and simulations where you can learn many of its tips, tricks, and pitfalls.”

Michael Cohen presents Traits Of A Good Investor | The Stock Investor – Stock Advice And Tips posted at The Stock Investor, saying, “These are the three most importnat traits of a successful stock investor.”

Jessie presents Ode To The 4 Hour Work Week – A Book Review posted at My Investing Blog, saying, “So I just finished up the book 4-Hour Workweek by Tim Ferriss. It has the standard self-promoting fluff that you have to dig through and weed out, but once you get through that, he’s actually got some pretty ingenious ideas that I think I may find myself implementing in the very near future…

legal considerations

Joe Hayes presents Political Jokes posted at Restoring Your Finances and Your Faith, saying, “Some really funny politically oriented jokes, just in time for the Election! Includes Barack Obama and John McCain related humor, and quotes from famous people too.”

William L. Exeter presents LandAmerica 1031 Exchange Closes Its Doors posted at The 1031 Exchange Institute, saying, “Discussion regarding the recent failure of LandAmerica 1031 Exchange Services.”

real estate market

Keira presents Rent or Own – What’s Best Right Now? posted at Rich Leverage.

The Fund investor presents The Hidden Advantage Of Mutual Fund Investing posted at Mutual Fund Investing Tips, saying, “Mutual fund investing is a good way to prevent making investing mistakes.”

Joe Manausa presents How To Stay Calm In The Real Estate Market posted at Tallahassee Real Estate Blog, saying, “The entire financial world appears to be a scary place right now. Many people are starting to “smell opportunity” and yet are a bit too fearful to act on their instincts. The goal of this article is to get you to consider doing some homework and creating a decision matrix so that you can start to take advantage of the opportunities when you are ready.”

Joe Manausa presents Discover The Secret To Making A Perfect Home Buying Offer posted at Tallahassee Real Estate Blog, saying, “There are so many infomercials and advertisements claiming that you can buy a home for mere pennies on the dollar that many potential home buyers are confused about what they should do.

The goal of this short article is to help you develop a mindset that will allow you to buy the home of your dreams without paying too much for the home.”

Joe Manausa presents Great News For First Time Homebuyers In Florida Real Estate posted at Tallahassee Real Estate Blog, saying, “It is interesting to note that in these times of financial hardship for everyone that there seems to be an abundance of financial assistance programs out there for eligible homebuyers purchasing new or existing homes in Florida.”

For any questions on 1031 Exchange please contact Bankers Exchange Services in Walnut Creek, California toll free at (877) 989-1031.

That concludes this edition. Submit your blog article to the next edition of 1031 exchange using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: 1031 exchange, blog carnival.

LandAmerica 1031 Exchange Services Company, Inc. announced that effective November 24th, they would not be accepting any new exchange customers and would be terminating their operations immediately. A significant portion of the exchange funds that Land America Exchange received were invested in securities that they are currently unable to sell or borrow against. Exchangers needing access to their funds in order to close on replacement properties within their prescribed time lines may face real challenges.

If you have a 1031 exchange transaction that you need to open, please consider Bankers Exchange Services. BES, wholly owned by Bay Commercial Bank, is participating in the FDIC Insurance “Temporary Liquidity Guarantee Program”. This program allows for all exchange funds deposited into non-interest bearing transaction deposit accounts and held in domestic offices of participating FDIC-insured institutions, to be fully insured. This provides an excellent option for exchangers whose proceeds will be over the current FDIC limit of $250K for individuals or $500K for joint accounts. You will be assured that the entire amount will be backed by the FDIC while held by Bankers Exchange Services. This program has been put into place by the FDIC and will remain in effect until at least December 31, 2009.

We also offer other types of deposit instruments including interest bearing and CDARS accounts. Some restrictions apply to the CDARS account, so please contact us for details.

When you work with Bankers Exchange Services, you will work with our highly experienced and professional exchange team. We have certified exchange specialists® on staff as well as an advisory attorney, all of whom will be happy to answer questions and lend assistance in structuring your exchange. We look forward to earning your trust and providing you with excellent service.

Bankers Exchange Services can be reached toll free at (877)989-1031 and has three locations to serve you in Walnut Creek, Oakland and Long Beach, California.

 
There are distinctive types of oil, gas, and mineral interests. A mineral estate is the perpetual interest in all the minerals on the land, and they are generally divided into leases, royalties, and production payments.

An Oil, Gas and Mineral Interest, often referred to as a working or operating interest, is a percentage of ownership in an oil, gas or mineral lease, and is considered a real property interest for federal tax purposes and therefore eligible for a 1031 tax deferred exchange. A working interest allows the lessee to enter the land and extract oil, gas and minerals for a set period of time or utill exhaustion, and with that, the obligation to incur the cost of operating expenses such as exploration and extraction. Often times, the sale of working interests include the sale of related equipment and other tangible personal property. If this is the case, the equipment can either be sold or handled as a separate personal property exchange.

A mineral royalty is a non-operating interest wherein the owner does not incur any cost of production, and receives a designated percentage of all minerals produced for the life of the property interest. A royalty interest is also considered real property for federal tax purposes.

A production payment is the right to a specified share or production from a mineral property when that production occurs. It is a carved out payment and is not considered real property for federal tax purposes and an exchange of a production payment for real estate will not qualify under section 1031.

Both working interests and royalty interests are exchangeable with other working and royalty interests as well as with ownership in other real estate, such as an apartment building, office building or single family rental home.

Remember, there is no substitute for effective tax planning. Once you and your tax advisor have determined that a 1031 tax deferred exchange is appropriate Bankers Exchange Services will guide you through the exchange process to successful completion. Please contact Erica O’Leary or Wendy Gallagher with your exchange questions. You can reach us toll free at (877) 989-1031.