Rp 2004-51

.03 Generally, only the payer may sign the letter requesting the extension for recipient copies. A transmitter must have a contractual
agreement with the filers to submit extension requests on their behalf. This should be stated in your letter of request for recipient copy
extensions. If you are requesting an extension for multiple payers electronically or magnetically, you must use the format specifications in Sec. 3.
.04 Requests for a recipient extension of time to file for more than 50 payers are required to be submitted electronically or magnetically. IRS encourages requests for 10 to 50 payers to be filed electronically or magnetically. (See Sec. 3, for the record layout.)
The request may be filed electronically, on tape cartridges, or 3½-inch diskettes.

Sec. 5. Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media
.01 If a payer is required to file on magnetic media but fails to do so (or fails to file electronically in lieu of magnetic media filing)
and does not have an approved waiver on record, the payer will be subject to a penalty of $50 per return in excess of 250. (For penalty
information, refer to the Penalty Section of the 2004 General Instructions for Forms 1099, 1098, 5498, and W–2G.)
.02 If payers are required to file original or corrected returns on magnetic media, but such filing would create an undue hardship,
they may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing Information
Returns on Magnetic Media, to IRS/MCC. Form 8508 can be obtained on the IRS website at www.irs.gov or by calling toll-free
1–800–829–3676.
.03 Even though a payer may submit as many as 249 corrections on paper, IRS encourages electronic or magnetic filing of corrections. Once the 250 threshold has been met, filers are required to submit any returns of 250 or more electronically or magnetically.
However, if a waiver for original documents is approved, any corrections for the same type of returns will be covered under this
waiver.
.04 Generally, only the payer may sign Form 8508. A transmitter may sign if given power of attorney; however, a letter signed by
the payer stating this fact must be attached to Form 8508.
.05 A transmitter must submit a separate Form 8508 for each payer. Do not submit a list of payers.
.06 All information requested on Form 8508 must be provided to IRS for the request to be processed.
.07 The waiver, if approved, will provide exemption from the magnetic media filing requirement for the current tax year only.
Payers may not apply for a waiver for more than one tax year at a time; application must be made each year a waiver is necessary.
.08 Form 8508 may be photocopied or computer-generated as long as it contains all the information requested on the original form.
.09 Filers are encouraged to submit Form 8508 to IRS/MCC at least 45 days before the due date of the returns. Generally, IRS/MCC
does not process waiver requests until January. Waiver requests received prior to January are processed on a first come, first serve
basis.
.10 All requests for a waiver should be sent using the following address:
IRS—Martinsburg Computing Center
Information Reporting Program
240 Murall Drive
Kearneysville, WV 25430
.11 File Form 8508 for the W–2 series of forms with IRS/MCC, not SSA.
.12 Waivers are evaluated on a case-by-case basis and are approved or denied based on criteria set forth in the regulations under
section 6011(e) of the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/MCC to respond to a waiver
request.
.13 If a waiver request is approved, keep the approval letter on file. DO NOT send a copy of the approved waiver to the service
center where the paper returns are filed.
.14 An approved waiver only applies to the requirement for filing information returns electronically/magnetically. The payer must
still timely file information returns on the official IRS paper forms or an acceptable substitute form with the appropriate service center.

26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.
(Also Part 1, §§ 1031; 1.1031(a)–1; 1.1031(k)–1.)

Rev. Proc. 2004–51

2000–2 C.B. 308, to provide that Rev.
Proc. 2000–37 does not apply if the
taxpayer owns the property intended to
qualify as replacement property before
initiating a qualified exchange accommodation arrangement (QEAA).

SECTION 1. PURPOSE

SECTION 2. BACKGROUND

This revenue procedure modifies sections 1 and 4 of Rev. Proc. 2000–37,

.01 Section 1031(a) provides that no
gain or loss is recognized on the exchange

August 16, 2004

294

of property held for productive use in a
trade or business or for investment if the
property is exchanged solely for property
of like kind that is to be held either for productive use in a trade or business or for investment.
.02 Section 1031(a)(3) allows taxpayers
to structure deferred like-kind exchanges.
Under § 1031(a)(3), property may be
treated as like-kind property if it is (A)
identified as property to be received in

2004–33 I.R.B.

the exchange (replacement property) on
or before the day that is 45 days after
the date on which the taxpayer transfers
the property relinquished in the exchange
(relinquished property), and (B) received
before the earlier of the date that is 180
days after the date on which the taxpayer
transfers the relinquished property, or the
due date (determined with regard to extensions) for the transferor’s federal income
tax return for the taxable year in which
the transfer of the relinquished property
occurs.
.03 Rev. Proc. 2000–37 addresses
“parking” transactions. See sections 2.05
and 2.06 of Rev. Proc. 2000–37. Parking transactions typically are designed
to “park” the desired replacement property with an accommodation party until
such time as the taxpayer arranges for the
transfer of the relinquished property to
the ultimate transferee in a simultaneous
or deferred exchange. Once such a transfer is arranged, the taxpayer transfers the
relinquished property to the accommodation party in exchange for the replacement
property, and the accommodation party
transfers the relinquished property to the
ultimate transferee. In other situations,
an accommodation party may acquire the
desired replacement property on behalf of
the taxpayer and immediately exchange
that property with the taxpayer for the relinquished property, thereafter holding the
relinquished property until the taxpayer arranges for a transfer of the property to the
ultimate transferee. Rev. Proc. 2000–37
provides procedures for qualifying parking transactions as like-kind exchanges
in situations in which the taxpayer has a
genuine intent to accomplish a like-kind
exchange at the time that the taxpayer
arranges for the acquisition of the replacement property and actually accomplishes
the exchange within a short time thereafter.
.04 Section 4.01 of Rev. Proc. 2000–37
provides that the Internal Revenue Service will not challenge the qualification
of property held in a QEAA “as either
‘replacement property’ or ‘relinquished
property’ (as defined in § 1.1031(k)–1(a))
for purposes of § 1031 and the regulations thereunder, or the treatment of the
exchange accommodation titleholder as
the beneficial owner of such property….”
Thus, taxpayers are not required to es-

2004–33 I.R.B.

tablish that the exchange accommodation
titleholder bears the economic benefits and
burdens of ownership and is the “owner”
of the property. The Service and Treasury
Department are aware that some taxpayers
have interpreted this language to permit a
taxpayer to treat as a like-kind exchange a
transaction in which the taxpayer transfers
property to an exchange accommodation
titleholder and receives that same property
as replacement property in a purported exchange for other property of the taxpayer.
.05 An exchange of real estate owned
by a taxpayer for improvements on land
owned by the same taxpayer does not
meet the requirements of § 1031. See
DeCleene v. Commissioner, 115 T.C. 457
(2000); Bloomington Coca-Cola Bottling
Co. v. Commissioner, 189 F.2d 14 (7th
Cir. 1951). Moreover, Rev. Rul. 67–255,
1967–2 C.B. 270, holds that a building
constructed on land owned by a taxpayer
is not of a like kind to involuntarily converted land of the same taxpayer. Rev.
Proc. 2000–37 does not abrogate the
statutory requirement of § 1031 that the
transaction be an exchange of like-kind
properties.
.06 The Service and Treasury Department are continuing to study parking transactions, including transactions in which
a person related to the taxpayer transfers
a leasehold in land to an accommodation
party and the accommodation party makes
improvements to the land and transfers the
leasehold with the improvements to the
taxpayer in exchange for other real estate.
SECTION 3. SCOPE
This revenue procedure applies to taxpayers applying the safe harbor rules set
forth in Rev. Proc. 2000–37 in structuring like-kind exchanges.
SECTION 4. APPLICATION
.01 Section 1 of Rev. Proc. 2000–37 is
modified to read as follows:

exchange accommodation arrangement”
(QEAA), as defined in section 4.02 of this
revenue procedure.
.02 Section 4.01 of Rev. Proc. 2000–37 is
modified to read as follows:
SECTION 4. QUALIFIED
EXCHANGE ACCOMMODATION
ARRANGEMENTS
.01 In general. The Service will treat
an exchange accommodation titleholder as
the beneficial owner of property for federal
income tax purposes if the property is held
in a QEAA. Property held in a QEAA may,
therefore, qualify as either “replacement
property” or “relinquished property” (as
defined in § 1.1031(k)–1(a)) in a tax-deferred like-kind exchange if the exchange
otherwise meets the requirements for deferral of gain or loss under § 1031 and the
regulations thereunder.
.03 Section 4.05 is added to Rev. Proc.
2000–37 to read as follows:
.05 Limitation. This revenue procedure
does not apply to replacement property
held in a QEAA if the property is owned
by the taxpayer within the 180-day period
ending on the date of transfer of qualified
indicia of ownership of the property to an
exchange accommodation titleholder.
SECTION 5. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2000–37 is modified.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective for
transfers on or after July 20, 2004, of qualified indicia of ownership to exchange accommodation titleholders (as described in
section 4.02(1) of Rev. Proc. 2000–37).
SECTION 7. DRAFTING
INFORMATION

SECTION 1. PURPOSE
This revenue procedure provides a safe
harbor under which the Internal Revenue
Service will treat an exchange accommodation titleholder as the beneficial owner
of property for federal income tax purposes if the property is held in a “qualified

295

The principal author of this revenue
procedure is J. Peter Baumgarten of the
Office of Associate Chief Counsel (Income Tax & Accounting). For further
information regarding this revenue procedure, contact Mr. Baumgarten at (202)
622–4920 (not a toll-free call).

August 16, 2004