Internal Revenue Service (IRS) You may not know it, but you might be disqualified from being able to take advantage of the 1031 exchange. And might be subject to 39.6% tax rate, if the IRS wouldn’t consider you a dealer. The way that you can ensure that you’re not a dealer is to have a corporation that owns and controls LLCs. Which ultimately own the assets. If you take this approach you will not be considered a dealer by the IRS. The IRS, notably, gets to make this decision on their own. So, make sure to contact a CPA and an attorney, to make sure you follow these rules. So that you’re not surprised by huge tax consequences. My name is Scott Smith, I’m an Asset Protection attorney out of Austin, Texas. I’m a real estate investor myself and I want to help you.