Lack of third-party intermediary blows real estate deal

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DEAR BOB: My wife and I owned three rental houses on the same street. We listed them for sale with a local Realtor who found us a buyer who wanted all three. But when we figured out our capital gain would be more than $300,000 and the tax would be huge, we got cold feet. Then the Realtor told us about Internal Revenue Code 1031 tax-deferred exchanges. That sounded good, especially because my sister wanted to sell her commercial building so we could trade for it. So we went ahead and sold the three rental houses. But after the closing, we learned from reading your article that we needed a third-party intermediary, such as a bank trust department, to hold our sales proceeds to use to buy the commercial building. The Realtor never told us about that. What should we do? – Russ W. DEAR RUSS: Please consult your tax adviser. From your explanation, it appears you "blew" the tax-deferred exchange by receiving the cash proceeds from the sale of your three rental houses. Purchase Bob Bruss...