Pennsylvania: Philadelphia DOR Issues Information on BIRT, NPT Treatment of IRC Section 1031 Exchanges

The Philadelphia Department of Revenue Sept. 15 issued information on the business income and receipts tax (BIRT) and net profits tax (NPT) treatment of exchanges of real property held for productive use or investment under Internal Revenue Code (IRC) Section 1031, for corporate income and individual income tax purposes. The information includes: 1) BIRT regulations don’t allow IRC Section 1031 tax- free exchange treatment for the gross receipts portion of the tax; 2) IRC Section 1031 must be followed under BIRT net income Method II but not under BIRT net income Method I; and 3) for purposes of the NPT, ...