Turning 1031 Challenges Into Tax-Efficient Opportunities

The end of the year can be a bit frightening, especially if you have neglected your tax planning. However, 10/31 Day can serve as an opportunity to reframe Halloween into a day to celebrate and explore the many strategies that can now protect your investable capital for years to come.

InCommercial Motor Fuel Fund IV LLC provides flexible, tax-efficient solutions for investors facing 1031 hurdles, DST exits, capital reallocation, private equity, and business exits – helping to defer taxes and optimize year-end planning.

Erik Conrad, chief executive officer of InCommercial Property Group, answers key questions about navigating common 1031 and tax planning challenges using InCommercial Motor Fuel Fund IV LLC to turn a potentially “scary” tax season into a smart financial opportunity.

What is 10/31 Day, and why should investors pay attention?

Erik Conrad: 10/31 Day isn’t just a play on numbers. It’s a timely reminder that year-end tax planning is here, and while 1031 exchanges can cross a calendar year, many strategies require completion before year-end. For investors holding appreciated real estate, DSTs, oil and gas interests, or Regulation D offerings, it’s the last stretch to make smart, tax-efficient moves before Dec. 31, 2025. Whether it’s rolling proceeds into a new 1031 exchange or exploring alternative structures, timing and strategy can make all the difference.

What challenges do investors face with 1031 exchanges?

Erik Conrad: While 1031 exchanges allow investors to defer capital gains by exchanging into like-kind real estate, not every transaction goes smoothly. Common challenges include:

• Broken or failed exchanges due to tight identification timelines;
• Unmanageable leverage that is difficult to replace in a new deal;
• Cash-out or excess BOOT* that triggers unexpected taxable income;
• Real estate investors looking to reallocate from illiquid to liquid investments; and
• Real estate professionals carrying high active income tax burdens.

These situations all point to one thing: the need for flexible, tax-efficient solutions that can bridge the gaps between traditional exchanges, investor needs, and year-end tax realities.

*BOOT: the amount of money or the fair market value of other non-like-kind property (e.g., cash, personal property, debt relief) that a taxpayer received in the exchange that is over the amount of appreciation in the relinquished property.

How does InCommercial Motor Fuel Fund IV help investors solve these challenges?

Erik Conrad: InCommercial Motor Fuel Fund IV is structured to work within an investor’s overall portfolio by providing a tool to offset income and gains accrued during the tax year by accelerating tax losses in a real estate investment fund. The fund invests in a well-established, necessity-based real estate sector, gas stations and convenience stores, which qualify for 100% bonus depreciation. This accelerated depreciation primarily offsets passive income and gains, providing investors with flexibility, whether they:

• Want to roll proceeds into a new 1031 exchange;
• Are exiting a DST and seeking continued tax advantages;
• Need a cash-out or partial reinvestment option;
• Are solving for a broken 1031 exchange or excess BOOT; and
• Are real estate professionals seeking to reduce a broad array of tax exposure.

In short, InCommercial Motor Fuel Fund IV has the potential to serve as a complement or alternative to a 1031 exchange, especially for investors seeking passive, income-generating, and tax-efficient opportunities.

Why motor fuel and convenience retail properties?

Erik Conrad: Properties that sell gasoline are one of the few asset classes that qualify for accelerated depreciation while also being long-lived structures. Unlike most depreciation-based investments that derive their accelerated depreciation capability by their shorter useful lives, “retail motor fuels outlets” qualify simply by generating most of their revenue from fuel sales. These properties are essential retail, meaning we believe they remain in demand regardless of the economic cycle. This makes them resilient, income-producing properties that we expect to be more valuable over time. By applying bonus depreciation to the fund assets, the investor has a compelling investment that, with tax-adjusted dollars, costs a small fraction of the total investment. The combination of stability and tax efficiency is ideal for those looking to offset gains from DST exits, 1031s, or other investments while remaining in income-producing real estate.

What should investors and advisers consider before year-end?

Erik Conrad: Timing is critical. Acting now allows investors to strategically offset gains, reset their tax positions, and take advantage of flexible options like InCommercial Motor Fuel Fund IV. For those navigating failed exchanges, DST cash-outs, or investors seeking liquidity, this fund offers a practical way to reallocate capital, pursue growth, and leverage bonus depreciation to complement or even replace a traditional 1031. The key is to evaluate your options now and make a move before deadlines pass.

LEARN MORE: Join the InCommercial webinar – held two more times on Nov. 4 and Nov. 6, both at 11 am CT – to see how investors are using 100% bonus depreciation and flexible fund structures to solve 1031, DST, and year-end tax challenges. 
Register for the Webinar HERE!

About InCommercial Property Group: InCommercial Property Group invests in net-leased, necessity-based assets in convenience retail and motor fuel. With 25 years of experience and a fully integrated operating platform, the firm combines deep market knowledge with tax-efficient structures that help investors preserve capital, generate growth, and navigate motor fuel strategies.

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InCommercial Property Group is a sponsor of AltsWire, and the article was published as part of their standard directory sponsorship package.

Disclosures: This information is not tax, legal, or investment advice; investors should consult their own advisers. Not an offer or solicitation to invest. Securities are offered through JCC Capital Markets, LLC, member FINRA/SIPC. Investments are for accredited investors only. All investments carry risks, including loss of principal. Past performance is not indicative of future results.