and b. One crucial aspect of a successful 1031 exchange is calculating the exchange basis accurately. And voila! You have the 1031 exchange value. Boo! Thanks to the 1031 exchange, you can reinvest the profits into another investment property (that costs the same or greater than the property you just sold) and avoid paying those taxes altogether. Reporting Rental Income . Normally, when a taxpayer sells property, gain or loss on the sale is recognized in the tax year in which the sale occurs. A 1031 exchange allows an investor to sell a property and roll the proceeds from the sale into another “like-kind” asset of greater value. The IRS generally considers real estate properties like -kind regardless of their quality or. § 1. A 1031 Exchange is a real estate transaction that allows individual investors to defer long term capital gains taxes on the profitable sale of a real estate investment property as long as the sales proceeds are reinvested into another, like kind property. The total new basis for the replacement property received would be the cost of the new property subtracting the gain deferred in the exchange. You don't have a lot of extra cash laying around to advance for an earnest money deposit. Like-kind exchange. 1031(k)-1 (a)). ; The basis of the replacement property is $20,000 −. 1031 (a)-1 (c) provides as an example of a like-kind exchange the exchange of a leasehold of real property with a remaining term of 30 years or more for a fee interest in real property. The most complete guide on partial 1031 exchanges including an example of a partial 1031 exchange. This might be obvious, but it’s worth noting: in a 1031 exchange, both the property being sold/exchanged and the property being bought need to be purchased by the same party. The basic steps involved in a 1031 exchange are: The property owner sells the existing property, known as the relinquished property, and identifies a. Labor index has increased by 44. A loan’s amortization is the amount of time over which the loan’s payment is. A “1031 exchange” is the nickname used to discuss Section 1031 of the U. For example, if you have a $150,000 loan and your property is valued at $200,000, you would divide $150,000 by $200,000, which equals an LTV of 75%. Split treatment: Use part of the property. For a 1031 exchange, a written rental agreement solidifies that the relationship is between a landlord and a tenant, and familial relation doesn’t change that relationship. 1031(d)-1(e) says that the basis of the replacement property acquired must be increased This leaves you with $130,000 of capital gains to defer. The words “like-kind” refer to the. Boot received is the money or the fair market value of “other property” received by the taxpayer in an exchange. Each time, the adjusted basis of the property is carried over in the manner described above. Only the excess basis of $500,000 ($1,500,000 – $1,000,000) is eligible for bonus. If you want to meet the conditions for a 1031 exchange, you much purchase a replacement property for at least $650,000. “It should be noted that a 1031. It allows you to defer capital gains taxes when selling a property, as. S. A 1031 exchange, named after section 1031 of the U. 3. Includes state taxes and depreciation. This formula yields a new basis of $2,175,000, which can be used to calculate the total long-term capital gains for the couple’s rental property. Only the excess. You must report all paid rent as rental income on your income tax returns. Prices range from $450 to over $1,500 per 1031 exchange. 1031 Exchange. IPX1031 focuses solely on Tax Deferred Exchanges. 137 months Result: 65 days is equal to 2. Many factors are involved in calculating taxes, including factors unique to each taxpayer. It states that none of the realized gain or loss will be recognized at the time of the exchange. a. They have decided that paying the tax is worth it to free up the cash. Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031. This is perhaps the most common question we get regarding 1031 exchanges. (A) The exchange group consists of real estate A, real estate B, and real estate R. Nevertheless, deferring taxes on as many assets as possible for as long as possible. Defer the tax. A related party 1031 transaction is a 1031 exchange completed between two related persons or entities as defined by the tax code. " This isn't just an event; it's a. Free, simple 1031 Exchange Capital Gains Calculator to help you estimate and calculate the reinvestment requirements for a tax-free exchange. Section 1031 (a) (1) states that: “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or. Like-Kind Property: Any two assets or properties that are considered to be the same type, making an exchange between them tax free . 1031 Exchange. In Peabody Natural Resources Co . The six major rules governing 1031 exchanges are: 1. § 1031) states the recognition rules for realized gains (or losses) that arise as a result of an exchange of like-kind property held for productive use in trade or business or for investment. As a result of the severe winter storms, flooding and mud slides that began in California on January 8, 2023, on January 10, 2023, the IRS issued an initial extension of the 45- and 180-day deadlines for IRC §1031 exchange transactions (outlined in this alert). An exchange of real. ChEBI. However, investors can opt-out of two schedule depreciation and depreciate the calculated cost basis on a single schedule. But there is an option for deferring capital gains taxes from the sale of an investment property by reinvesting the proceeds. David Greene reveals the complete, realistic, and uncomplicated formula that all self-made multimillionaires implement to achieve wealth and financial freedom. 373. 1) You don't mind paying taxes. 184 J/g oC. Their services can be as disparate as their cost. August 2, 2022. 1031 exchange is purchased for $1,500,000. If not already, this may be the time to seek professional guidance from one of your local top-rated real estate agents and 1031 exchange companies. 3. There was $700,000 of depreciation leftover at the time of the exchange (aka “carryover basis”). Choose a qualified intermediary to coordinate the exchange. 3) Still other times boot is avoidable. 180-Day Closing Period. We also offer a 1031 deadline calculator. Add the Closing Costs and Capital Improvement Costs for Your Real Estate. Internal Revenue Code, is a way to postpone capital gains tax on the. A 1031 exchange, named after Section 1031 of the U. To calculate the QI’s average 1031 funds on deposit, divide the aggregate dollar amount of exchanges obtained by Question 2. With a 1031 exchange, no tax consequences are. The closing process can be messy but they did a good job communicating with me, seller attorney, settlement agent. It also makes it easier to use leverage to upgrade to a larger or better-performing property. The rules and timelines for completing a 1031 Exchange are outlined in. Here's some estimated numbers from 2006 (from Form 8824): FMV of condo: $196000. Assuming the highest tax rate of 37%, the tax due on the $250,000 of depreciation recapture in the example above is $92,500 ($250,000 * 37%). Those capital. David Greene reveals the complete, realistic, and uncomplicated formula that all self-made multimillionaires implement to achieve wealth and financial freedom. We don't think 1031 exchange investing should be so difficult. When you sell an investment property, you are disposing of a tangible asset that the IRS classifies as “real property. 1031 Exchange Addendum (New Form) Annotated: Clean: Comments: Minutes & Exhibits (Oct. Property Y: $300,000 / total replacement property value of $1,200,000 = 0. 95% Rule. The remaining 10% will remain outside the exchange. ”. This internal revenue code allows anyone to defer capital gains taxes on the sale of their property. However, there are times when you may want to hold back part of the sales proceeds and use the money for another purpose. If you do, the IRS may choose to challenge it. 37. It might have a residence involved, and the residence might be your “primary residence” as that term is used in Section 121. 8% in taxes on the sale of their investment property because of capital gain and depreciation recapture. . The simplest type of 1031 exchange involves a simultaneous swap of one. Rather, a 1031 exchange allows you to postpone paying tax on the gain. Normally a 1031 exchange is used to defer the capital gains tax owed by reinvesting 100% of the proceeds from the sale of a relinquished property into the new replacement property. A 1031 exchange is a popular tool for commercial real estate investors to defer paying capital gains tax. Code section 721 states that if you contribute property for an interest in a partnership, it is tax-free to the extent the only property received in. Property Y: $300,000 / total replacement property value of $1,200,000 = 0. This is a great investment strategy to diversify your portfolio with a different type of. Potential Risks of 1031 Exchange for New Construction Time Constraints. 1245(b)(4) recapture. 25. A 1031 exchange is for those who wish to sell one property (or group of properties) and “exchange” that asset for a “like-kind” property. I'm having a hard time calculating the taxes owed. Section 1031 of the U. The QI instructs the person preparing the transfer deed to directly deed the property from the taxpayer to the buyer; however, the QI directly receives the funds from the closing of the sale. 1031 exchange: selling as individual, buying as LLC? 1. It’s best to work with. A 1031 exchange comes from Section 1031 of the U. A 1031 exchange is a tax management tool that allows investors to defer the realization of capital gains taxes when they sell an investment property. Using a 1031 exchange to move from one investment property to another while deferring the tax liability on any capital gain is a useful tool for real estate investors who want to reinvest the proceeds into like-kind assets. Sec. ” All deadlines below start from the closing date of the relinquished property (the contract date does. Also, because your total income was above $200,000, the entire gain of $255,000 is subject to the 3. Technically, there are. Since properly structured DSTs are. -The giving of boot in a § 1031 likekind exchange can result in the recognition of gain. The 1031 Exchange Equation. . Section 1031 of the Internal Revenue Code (To IRS. This taxpayer fully depreciated the five-year property components by the time the exchange occurs. (Copper has theIn the first two years, your personal usage cannot exceed 14 days, and you’ll need to rent it for 10 times the number of personal use nights: at least 14 days per year. You choose to sell your current property with a $150,000 mortgage on it. However, there are times when you may want to hold back part of the sales proceeds and use the money for another purpose. Switching from a 1031 exchange to a QOZ fund continues the tax deferral, but only until the end of 2026, at which point that capital gains tax must be paid. Jean Bolger. The basis for the new asset. +Gain recognized. Combining 1031 and primary residence. Capital gains tax might result from selling your home, stocks, bonds, commodities, mutual funds, a business, and other similar capital assets. 1031 Exchanges Don’t Work to Downsize an Investment. The 1031 exchange can then only be applied to the investment portion of the property. The 1031 exchange can be particularly helpful if you want. Still, “the question of ‘how often’ is a gray area in the IRS code,” Lueong warns. Under Section 1031, taxpayers can postpone paying this tax if they reinvest the profit in similar property. The seller requests buyer’s cooperation in this exchange and agrees to hold buyer harmless from any and all claims, costs, liabilities, or delays resulting from this exchange. There was $700,000 of depreciation leftover at the time of the exchange (aka “carryover basis”). Sometimes your investment real estate will not be entirely investment real estate. Many of those rules—such as the following—are specific to replacement. David Greene reveals the complete, realistic, and uncomplicated formula that all self-made multimillionaires implement to achieve wealth and financial freedom. com. This calculator will help you to determine how much tax deferment you can realize by performing a 1031 tax exchange instead of a taxable sale. Let's see: You sell one property, and to avoid paying cap gains tax, you th. ”. A partial 1031 exchange is a type of exchange in which the investor does not reinvest the full amount of proceeds from the sale of the relinquished property into the replacement property. "In a 1031 exchange, properties must be of equal or greater value to fully defer all capital gains tax liabilities – you cannot use the exchange process to improve your financial standing or reduce leverage. The IRS is strict about 1031 exchanges, so you need to be sure you are following the rules exactly. Calculate the taxes you can defer when selling a property. The taxpayer took depreciation on Property X for the 10 years they owned the property. S. A gain – sometimes referred to as a gain on sale – is the difference between the sales price of a property and its cost basis. Additionally, as long as the property ownership is not treated as a separate business entity, if the owner decides to sell the property later, the sale could be structured as a like-kind exchange under Sec. Items That Are Not Considered 1031 Exchange Expenses. S. 1031 Learn with flashcards, games, and more — for free. Example: convert 15 United States Dollar to Indian Rupee: 15 United States Dollar = 15. According to Section 1031 of the U. Determining the Adjusted Basis. Property Y: $300,000 / total replacement property value of $1,200,000 = 0. This starts from the date of the sale of the relinquished property. It is a short-chain primary fatty alcohol and a member of propan-1-ols. Question 8. (1) Federal Capital Gains equal to Realized Gain less depreciation taken multiplied by the applicable rate. WASHINGTON —– Today the Treasury Department and Internal Revenue Service issued final regulations relating to section 1031 like-kind exchanges. But, the scope of the program was limited starting January 1, 2018, to only include business. 1. To qualify as like kind, two assets must be of the same type (e. Requirement #1: The first requirement seems simple enough: to be eligible for a 1031 exchange, you must be a real estate investor, in possession of an appreciated piece of real property. Doing so is known as a like-kind exchange, which allows taxpayers to grow their investment on a tax-deferred basis. 643. This amount can range anywhere from 15-20% of the sale price, with an additional surtax of up to 3. All 1031 experts! I sold a condo in 2006 and used a 1031 exchange to buy a townhouse. This sounds like they need to be similar in type, but the IRS defines like-kind broadly. However, investors can opt-out of two schedule depreciation and depreciate the calculated cost basis on a single schedule. The property sold is the “relinquished property. ; Therefore, you recognize a gain of $25,000 − $20,000 = $5000. 25. 3) You want to reduce exposure to real estate. The recent tax law change added a transition rule. gov) details how a §1031 exchange works. With a 1031 Exchange, you can defer, reduce, and even eliminate paying taxes. Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031. e. The real estate in question must, however, pass two requirements: (1) it must be kept for investment purposes; and (2) it must be of “like kind. No capital gains tax is incurred on inventory assets. The three primary 1031 exchange rules to follow are: Replacement property should be of equal or greater value to the one being sold. For this reason, you cannot refinance a property in anticipation of an exchange. Buying 1031 Exchange Replacement Property from a Related Person Mar 14, 2022. 1 United States Dollar = 83. The sales price of the current property: $750,000 less adjusted basis, sales, and closing feesQualifying property must be held for use in a trade or business or for investment. Boca Raton, FL. Under the Three Property Rule the exchanger may identify up to three properties, regardless of value, as long as. 1. In this example, the amount is based on $400,000 of depreciation taken. Get Your Copy. In this article, we are going to explain the similarities and differences between the 1031 exchange and the 1033 exchange. type of Section 1031 exchange is a simultaneous swap of one property for another. Triple net leases can be combined with § 1031 exchanges to really maximize your investment. Replacement property must be purchased within 180 days. Assuming on average a QI holds exchange funds for 120 days (120/365 = 3), their average 1031 funds on deposit is $80. guest speaker, Laura McKee, who will expertly guide us through the transformative topic of "Building Wealth through 1031 Exchange. A 1031 exchange, named after Section 1031 of the Internal Revenue Code, is a tax-deferred exchange that allows investors to exchange one investment or business property for another of like-kind while deferring the payment of capital gains taxes. In replacing the VALUE of the debt, the IRS. Depending the taxes, we may just to another 1031. Propan-1-ol is the parent member of the class of propan-1-ols that is propane in which a hydrogen of one of the methyl groups is replaced by a hydroxy group. Section 1031 sets specific time periods on the identification and receipts. Section 1031. Generally, income earned in your business on a regular basis. Diversification and sizing. The 1031 exchange can be particularly helpful if you want. 5MM in proceeds and reinvest $1MM into the new property. Let’s start with the simplest word: you. Real estate investors are allowed to complete an exchange of. Capital gains tax is owed when you sell a non-inventory asset at a higher price than you paid resulting in a realized profit. Increased Buying Power. The 1031 Exchange Timeline. Reverse Exchange: A type of property exchange wherein the replacement property is acquired first, and then the current property is traded away. Multiple property involvement ramps up complexity to the next level. The strict rules surrounding 1031 exchanges require the new investment property to be of equal or greater value than the property being. If the valuation of the replacement property is lower, an investor can settle the 1031 exchange by paying the difference between the properties' prices. Pulling money out tax free prior to the exchange would contradict this point. Adjusted basis of like-kind property surrendered. The new property that is received in the Sec. There is some complexity and tight timelines to a 1031 exchange so it can be helpful for real estate. Requires only 10 inputs into a simple Excel spreadsheet. Compounding Your Investment with a 1031 Exchange A 1031 exchange is a phenomenal tool for commercial real estate investors. This is what I come up with when I simply plug in the numbers in the example. In the context of a 1031 exchange, “boot” refers to the portion of a transaction that doesn’t meet the tax-free criteria and thus becomes subject to immediate. Step 1: Disposing of the original assetThe Biden Administration has proposed limiting Section 1031 like-kind exchange deferral to a maximum of $500,000 (single taxpayer) / $1 million (married taxpayers) in the budget for FY2024. Deferred exchanges are more complex but allow flexibility. So you can’t use your real estate broker or agent or a relative to facilitate the. =Basis of like-kind property received. the $300,000 relinquished property gain minus $100,000 taxable boot. A 1031 exchange is also known as a like-kind property exchange or a Starker exchange. The purpose of a 1031 exchange is to encourage active reinvestment in the. ) into the Replacement Property AND she will need to replace the VALUE of her debt – the $400,000 loan. If the Biden limit passed, Jeff would be required to report $200,000 in capital gains. It does not apply to personal property, but it can apply to residential property, such as multi-family homes and apartment complexes. 1031 exchange benefits. (2) Based on amount of depreciation taken during ownership of the property. This exchange allows you to defer capital gains taxes by permitting funds from selling one investment property to be exchanged for another. I have a question. A 1031 exchange enables real estate investors to defer tax liabilities on the sale of an investment property by reinvesting the. A 1031 exchange allows you to avoid depreciation recapture for the same reason it allows you to avoid capital gains taxes. Pros Of The 1031 Tax Deferred Exchange Rules #1 Using the 1031 tax deferred exchange rules is to defer the capital gains taxes. One option to consider is to complete your exchange by re-investing ALL of your equity (1031 funds) into a replacement property of equal or greater value; and then later in a subsequent (separate post. To qualify as like kind, two assets must be of the same type (e. Regular 1031 exchange rules are already challenging enough. Buying Down in Value Example: Lila is selling her rental townhouse for $1,000,000 and plans to utilize a 1031 Exchange to defer her taxes. A portion of the proceeds (the “boot”) is received in cash. Take 400k to buy an investment property while taking advantage of the 250k tax exemption on capital gains for primary. Are you interested in deferring your taxes when you transition between investment properties but don’t want to roll all of your cash proceeds forward into. It may also be used as a means of formalizing language. 1031 Exchange rules state that any difference between the amount of net sales proceeds received and total amount invested in. 3217 Indian Rupee. What is a 1031 exchange? A 1031 exchange is a transaction in which eligible property is exchanged for property of like-kind and gain or loss is deferred for federal income tax purposes. If you do wind up taking control of the cash at any. Section 1031 (a) of the Internal Revenue Code ( 26 U. Capital Gains Tax. Benefits Of A 1031 Exchange. -Fair market value of boot received. Tax Deferral. Last reply by. We can assist you in complying with. Boot is a portion of the sales proceeds you receive from a 1031 exchange that isn’t re-invested in a replacement property. Business income. Assuming that all the five-year property identified in the cost segregation study is affixed to the building and considered real property for Sec. But, to take full advantage of this program, the IRS has established a. While short-term capital gains – realized in. A 1031 exchange is the process where a person sells one investment property and purchases another “like-kind” property (or multiple properties) of equal or greater value than the property sold. QUALIFYING PROPERTIES: A key rule about 1031 exchanges is that the transaction must take the form of an “exchange” with “like-kind” properties, rather than just a sale or one property. Capital Gains Tax. (B) Under paragraph (b)(2)(ii) of this section, all liabilities assumed by U ($7000) are excess liabilities assumed. However, you can’t take actual possession of the replacement property until the. A 1031 exchange, named after Section 1031 of the Internal Revenue Code, is a tax-deferral strategy that allows real estate investors to sell an investment property — not a primary residence. A 1031 exchange – also known as a like-kind tax deferred exchange or Starker Exchange – is a process used by real estate investors around the country to defer the payment of capital gains tax. The investor relinquishes their original property. The portion of the exchange proceeds not reinvested is called “boot” and is subject to. Jeff’s company is a Qualified Intermediary for 1031 exchanges of real estate. But, some property doesn’t qualify, says the IRS. 1031 exchange is purchased for $1,500,000. API’s national headquarters is in Roseville, CA. Also, it’s important to remember that a 1031 Exchange requires the taxpayer to purchase more real estate. dollars, the country’s official currency. Although billions of dollars worth of commercial real estate has traded hands through the 1031 exchange process, some. Step Number Three. 04/25/23. Normally a 1031 exchange is used to defer the capital gains tax owed by reinvesting 100% of the proceeds from the sale of a relinquished property into the new replacement property. Because any money you receive from selling a property is taxable, you technically can’t receive that money when you sell your property. 3%. Exchangers can defer the payment of capital gains taxes and other types of taxes on the sale of their property if they purchase a replacement property in accordance with 1031 guidelines. How 1031 Exchanges Work + Examples. The 1031 Exchange Calculator above provides a simple estimation of potential taxes related to the sale of investment property and net sales proceeds available for reinvestment. A partial exchange allows you. My parents have a trust setup with both of them as managing members. 779. 2. For each additional property to be processed, it’s ~$350 more. Section 1031 of the IRC makes this possible by reinvesting the proceeds from the sale of an investment property into a “like-kind” property, which allows investors to keep more profits in their pockets. Like-Kind Exchange: A tax deferred exchange that allows for the disposal of an asset and the acquisition of another similar asset without generating a tax liability from the sale of the first. A 1031 Exchange, sometimes called a “Like Kind Exchange,” is a tax deferral strategy used by experienced investors to defer tax liability/income tax on the profitable sale of an investment property. The majority of the revenues from the sale of a. If not already, this may be the time to seek professional guidance from one of your local top-rated real estate agents and 1031 exchange companies. 310. They’re now selling it for $1 million. At the heart of the 1031 exchange is the 1031 exchange timeline, which dictates how a 1031 exchange is performed. e. A residential property can be used in a 1031/Like-Kind Exchange. David Greene reveals the complete, realistic, and uncomplicated formula that all self-made multimillionaires implement to achieve wealth and financial freedom. The publisher is notLet’s break down the key 1031 exchange rules in layman’s terms: 45-Day Identification Period. , your attorney, your real. With over 10 years of experience in the 1031 industry, Asher has extensive knowledge of all facets of 1031 Exchanges. 0. IPX1031® Essentials. Reg. The first property—the one your client is selling—is known as the Relinquished Property, and the like-kind. 86 % during June 2015 to June 2019. The 1031 exchange equation shows how the taxpayer can quickly calculate whether there will be recognized gain based on the following principals. Replacement property must be identified within 45 days. Because of this change, the exchange of personal property for other personal property of like kind is now a taxable event. There are two parts then to the sale: the $450,000 exchanged. We are doing a 1031 exchange on a property we are selling to purchase a retail plaza property. Calculating the basis for the new (replacement) property in a 1031 exchange is simpler--the purchase price plus the commission paid. The new property that is received in the Sec. Which of the following statements is correct? -The receipt of boot in a § 1031 likekind exchange can result in the recognition of gain. S. Both the property transferred and the property received are held either. Adjusted basis of like-kind property surrendered. 25. 1031 exchange is purchased for $1,500,000. As outlined above, there are specific scenarios to use the addendum as well. While earlier interpretations of the section allowed investors to defer capital gains taxes on a range of investment assets, Congress restricted the definition to investment real estate in 2017. IPX1031 is the best choice for your 1031. Failure to use a QI can result in missteps, causing the disqualification of the exchange and the. This depreciation recapture expense, like capital gains taxes, can be deferred using a 1031 exchange to dispose of the property. The IRS oversees these exchanges and stipulates tight deadlines for completion, along with other. Are you interested in deferring your taxes when you transition between investment properties but don’t want to roll all of your cash proceeds forward into. “Buyer is aware that the seller intends to perform a 1031 exchange. In a backward 1031 exchange, the rental building is acquired even before the old one is sold. Tax-deferred doesn't mean tax-free. A taxpayer can continue to exchange replacement property acquired through previous 1031 exchanges. The total gains deferred of $500,000 must be split proportionately between the two replacement properties Y and Z to determine what amount is taken from each property’s acquisition cost to come up with the new cost basis for each property. 1031 Exchange. (TCO 11) If boot is received in a § 1031 like-kind exchange and gain is recognized, then which formula correctly calculates the basis for the like-kind property received? (Points : 2) Adjusted basis of like-kind property surrendered + gain recognized - fair market value of boot received Fair market value of like-kind property. Question 8. The name “1031 exchange” comes from Section 1031, Title 26 of the Internal Revenue Code, which contains the appropriate. Material index is fluctuating and has. Do’s. A partial exchange allows you to retain. 1031 exchange investors can exchange into multiple DST investments at the exact amounts needed to satisfy the like-kind replacement requirement. For example, if an investor bought a property for $1,000,000 and claimed $100,000 in depreciation during ownership, the investor would have an adjusted basis of $900,000 ($1,000,000 purchase price. We tried to find some amazing references about 1031 Like Kind Exchange Worksheet And Form 8824 Worksheet Template for you. 1031(a). 1 Vote 11 Replies. That would require Congressional action. Total new basis: $515,000 - $101,029 = $413,971. The capital gain tax on appreciation in value goes up from 15% to 20% when “Taxable Income” exceeds $492,301 (single) or $553,851 (married filing jointly).