IRS extends Katrina-related deadlines...

On February 17, 2006, the IRS issued additional relief to taxpayers affected by Hurricane Katrina. Taxpayers in the most severely impacted parishes and counties now have until August 28, 2006 to perform "time-sensitive actions." Such "time-sensitive actions" include extensions of your 45-day and 180-day deadlines for 1031 exchanges.

Though the relief is somewhat vague, our interpretation is that if you are in one of the Severely Impacted Parishes or Counties listed below, the IRS will presume you were affected, and you should easily qualify for the relief. If you are in one of the Additional Impacted Parishes and Counties, you may have to prove to the IRS that you were affected. These include taxpayers in Louisiana, Alabama and Mississippi who are not in the Severely Impacted Counties, but who may have been severely impacted by Hurricane Katrina nevertheless.

In either case, you will be required to write "Hurricane Katrina" in red ink at that top of your tax return when you file it. You may also call the IRS Disaster Hotline at (866) 562-5227 for more information, or go to the IRS website at www.irs.gov and go to the Disaster Relief page.

--The Experts