SB&OH EXCHANGE ACCOMMODATORS, LLC

March 1, 2004

Dear Friends:
Time flies when you're having fun.  How else can you explain that it is already March, the month of St. Patrick's Day, March Madness, and the official start of Spring.  It's said that if March comes in like a lamb, it will go out like a lion and vice versa.  If that's the case, watch out – because it certainly is a lovely spring day today, March 1.

Last month we wrote that although capital gains tax rates had been reduced, we strongly recommended that investors speak to their tax preparer before deciding whether or not a 1031 exchange is right for them.  We noted that in addition to the capital gains tax, depreciation recapture also needs be considered.  The depreciation recapture of 1250 property is at a rate of 25 percent; however, depreciation of 1245 property, which can be included in an exchange, is recaptured as ordinary income.  Best advice – see your CPA.

Another area that is of increasing interest as it pertains to 1031 real estate exchanges is that of tenant-in-common interests.  Is such interest truly a real estate exchange or sale of a partnership interest?  Obviously, one qualifies and one does not.  The best thing to do if you have any questions in this area, and it is a tricky one, is to call directly to Jeff Helsdon or Tom Oldfield to have your questions answered.

As we mentioned at the beginning, March is the month of the NCAA tournaments:  March Madness.  The challenge is to become number one.  The difference between the ordinary teams and the extraordinary ones is that little extra.  That is what makes them champions.  That we will do that little extra for you is our pledge.

Sincerely,
Your Friends at
SB&OH Exchange Accommodators, LLC