Related Party 1031 Exchanges



Me and my business partner are each 50% owners of an LLC.
We are involved in a 1031 exchange. One of our
identification properties is owned by my business partners'
mother. It is a residential investment property which she
has lived in for 2 of the last 5 years, thus making gains on
the property (250K/person) non taxable per my understanding.
If we purchase her property and she does not exchange but
instead "cashes out" have we violated 1031 related party
rules? If we are violating 1031 rules, can we satisfy them
by decreasing my business partners share in the LLC to below
50%? We intend to hold the property for at least 2 years.

Thanks in advance for your answer.
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