Moreover, Defendants request a more definite statement of the conduct by each Defendant that Plaintiff claims was wrongful and supports his claims as well as facts regarding Plaintiff’s alleged damages. Throughout the Complaint, Plaintiff references a “§ 1031 – Exchange,” which is a provision of the Internal Revenue Code that allows investors to defer capital gains taxes when selling property. Plaintiffs allegations regarding “1031 – Exchange” are vague, ambiguous, and confusing.

Property owners seeking tax-deferred treatment have 180 days from the date of the sale of their “Relinquished Property” to identify a “Replacement Property” and close on the purchase. IRC § 1031(b)(3). In order to defer the tax, Exchangers are not permitted to take possession of sale proceeds, but instead must have a QI take possession of the exchange funds.

Buyers and their salespersons fare no better. The opinion will force a buyer’s salespersonto discloseto the seller that: ¢ The buyer needs to close quickly (e.g., to consummate an exchangesale under 26 U.S.C. § 1031); ¢ the buyer prefers the homeover others in the neighborhood; ¢ the buyer is amenable to non-price concessions; e the buyer hasfinancial difficulties; e the salesperson believesthe list price is too low. 19 This topsy-turvy world flatly contradicts the expectations of California consumers. When anindividual(not a brokeragefirm) is the dual agent, the parties can easily perceive the potential risk—therisk of sharing sensitive information is obvious.

12-116) b. 26 U.S.C. § 1031 Places No Restrictions on Investments in Which a Qualified Intermediary May Place Funds Mr. Carpenter’s good faith must also be evaluated in light of the federal statute and regulations concerning § 1031 exchanges. Neither the statute, 26 U.S.C. § 1031, nor the regulations, IRS Reg. § 1.

12:28. Case 1:04-cr-10029-GAO Document 160 Filed 08/05/2005 Page 16 of 21 17 Pursuant to Fed. R. Evid. 201, this Court may take judicial notice of the fact that neither the statute governing 1031 exchanges (26 U.S.C. § 1031) nor the governing regulations (26 C.F.R. § 1.1031(k)-1) impose any limits on how BPE could invest the funds.

115. On September 16, 2016, the Court entered an Order: (a) requiring the United States to issue and record a certificate of discharge as to the tax liens encumbering the Eleventh Property; (b) holding that the United States’ federal tax liens attached to the net proceeds of the sale of the Eleventh Property until such time as defendant Janet Wade was able to complete an exchange under I.R.C. § 1031; and (c) restricting the use of the proceeds from the sale of the Eleventh Property solely to build six additional apartment buildings on the parcel described Case 2:15-cv-00883-DS Document 162 Filed 06/16/17 Page 31 of 67 32 herein as the Tenth Property. (Dkt.

Insofar as the tax code is concerned, an intermediary may invest the proceeds or not in ways it may see fit.”); see also Motion for Acquittal at 19 (neither 26 U.S.C. § 1031, nor its relevant regulations put any restrictions on investment, and further that “safe harbor” does not reference safety of funds, but rather the possession of the funds by a qualified intermediary in order to defer a taxable event). Therefore, the government has vastly overstated its suggestion that the utilization of a particular investment vehicle, by definition, is contrary to the purpose of Section 1031.

3 The Internal Revenue Code does not even mention qualified intermediaries. See 26 U.S.C. § 1031. Assuming the First Circuit was referring to the § 1031 regulations issued by the Treasury Department, they are also silent on how an intermediary can invest exchange proceeds.

Based solely on this alleged breach by Advance, 1 A “1031 exchange” is made pursuant to Internal Revenue Code section 1031, which provides that that “[n]o gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.” 26 U.S.C. § 1031(a)(1). A “qualified intermediary” provides the mandatory mechanics of a 1031 exchange.

The purpose of 1031 exchanges and what the BPE agreements provided is not a matter of dispute. The agreements, the statute governing 1031 exchanges (26 U.S.C. § 1031), and the regulations governing 1031 exchanges (26 C.F.R. § 1.1031(k)-1), all speak for themselves.