Summit 1031 Exchange - Information is Forthcoming

SUMMIT 1031 EXCHANGE

December 19, 2008

To All Customers of Summit 1031 Exchange:

In a prior website posting dated December 15, 2008, Summit Accommodators, Inc. ("SAI") reported it was experiencing significant financial issues, had ceased funding open exchanges, and had curtailed its daily operations until those issues could be addressed. This letter will provide you with updated information and report the actions SAI has taken to address and resolve its financial issues.

SAI currently has approximately $ 27,831,363.00 in open exchanges for customers of Summit 1031 Exchange ("Summit Customers"). However, the total cash in SAI's exchange funds related accounts is $ 13,600,212.88, which is a cash shortfall of approximately $14,231,151.00. Although SAI has other assets that it hopes will be sufficient to pay all Summit Customers, those assets are unfortunately illiquid at this time and not immediately available to fund open exchanges.

On December 19, 2008, SAI did the following to address these issues:

1) SAI filed a petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Oregon, Case No. 08-37031-rld11. All of SAI's assets, including the exchange funds, will be preserved intact pending decisions to be made by the Court. SAI's Chapter 11 bankruptcy attorneys are Susan S. Ford and Thomas W. Stilley at Sussman Shank LLP, located in Portland, Oregon. Summit Customers are listed as creditors in the case and are entitled to appear, be heard and file claims with the Court. You will receive further notices regarding SAI's Bankruptcy Case in the mail. Should you desire or require bankruptcy advice to protect your rights, you should contact a qualified attorney to assist you with this process.

2) SAI has replaced its existing management to provide transparency, independent decision-making and control. Tyrell B. Vance LLC, ("Vance") has been retained as SAI's Chief Restructuring Officer ("CRO") for all purposes in the Chapter 11 case. Vance is a recognized business crisis manager and court receiver in multiple jurisdictions with over 30 years of such experience. Effective immediately, Vance has been given independent authority to investigate all transactions and to manage SAI and all of its assets for the exclusive benefit of SAI and its creditors, specifically including all Summit Customers, until all debts are paid in full or all assets have been appropriately liquidated and paid to creditors, subject to the direction of the United States Bankruptcy Court. Vance will take possession of and preserve all exchange fund accounts maintained by SAI for Summit Customers. Vance will further assume control of SAI and all of its assets, books and records, and will have the power as CRO to propose a plan for SAI to pay creditors, to bring claims against third parties, and to do all other acts as may be necessary in the interests of SAI and its creditors or as ordered by the Court.

3) Vance as CRO of the Company has retained Obsidian Finance Group, LLC ("Obsidian") as financial consultants to provide advice with respect to all tax issues affecting Summit Customers and a plan to mitigate damages to the maximum extent possible of currently unfunded exchanges. In addition, Obsidian has been retained to review substantial real estate investments and recommend the best method to realize the value of such investments to satisfy claims. Obsidian is a national financial consulting firm, which specializes in distressed enterprises and assets.

This situation resulted from loans of exchange funds made by SAI over a period of time ending in approximately the year 2006 to Inland Capital Corporation ("Inland"), which in turn loaned funds to various entities and individuals that were involved in real estate investments located primarily in central Oregon. Inland is owned by the same persons who own SAI. The members of the entities and the individuals to whom Inland made loans are in most cases one or more of the owners of SAI.

Although liquidity was not an issue for many years and much of the outstanding loan balance from Inland to SAI was repaid, the recent crisis and downturn in the formerly profitable real estate market caused the entities and individuals who owe Inland to be unable to repay loans in a timely manner, which in turn caused Inland to be unable to repay SAI. The current amount owing from Inland to SAI is approximately $13,706,557.21. The existing real estate investments will be made available to repay the loan balance and satisfy claims, in addition to any and all other available assets and resources of SAI. However, it will unfortunately take time to determine, realize and reduce the value of such assets to cash to pay Summit Customers and creditors. SAI is hopeful that its assets will be sufficient to satisfy all customers' and creditors' claims, and is committed to doing so under the independent direction and control of Vance, as CRO, and the United States Bankruptcy Court.

SAI deeply regrets the distress and detriment that Summit Customers are currently experiencing. The foregoing actions have been voluntarily taken by the existing management to assure Summit Customers that SAI is committed to complete transparency regarding these issues, to ensure that all of its actions will be exclusively for the benefit of Summit Customers and creditors, and to eliminate any uncertainty that SAI's assets will be preserved.

Phone: 800.909.1031

Summit 1031 Exchange - Information is Forthcoming

Summit 1031 Exchange - Information is Forthcoming

Libertarian or libertarian? - Commentary - The Washington Times, America's Newspaper
My friend, Bruce Bartlett, calls for a policial organisation in favor of liberty.

Climate ideology control -- The Washington Times

Philadelphia Inquirer | 12/05/2006 | Roots of debacle in Iraq are in neocon ideology

Federal Appeals Court: Driving With Money is a Crime

Just so you will know. Forfeiture gone wild.

Internal Revenue Bulletin - August 14, 2006 - Notice 2006-67This is the IRS' explanation of how the GO Zone Bonus Depreciation rules work. Especially important is the active conduct of business rules and the recapture provisions.

The neocons' next war

Bending Starker Exchange Rules Can Be Risky Business

This from the Washington Post.

IRS Publication 4492 Gives Information for Taxpayers affected by Katrina: "http://www.irs.gov/pub/irs-pdf/p4492.pdf "

IRS Extends Hurricane Losses Deadline


WASHINGTON_The IRS on Friday gave people hit by hurricanes last year an extra six months to decide whether to claim losses related to the disasters on 2004 or 2005 tax returns.

Taxpayers living in regions of Florida, Alabama, Mississippi, Louisiana and Texas hit by hurricanes can claim unreimbursed losses on their 2005 tax returns, or they can claim the losses by amending their 2004 tax returns.

The deadline for amending the previous year's return is now Oct. 16, extended from April 17. The decision does not extend the regular tax return filing deadlines.

The IRS instructed taxpayers to write, in red ink, the name of the hurricane on top of their tax forms. The tax agency also has a special publication and a disaster hot line, 1-866-562-5227, to help taxpayers who suffered losses in the hurricanes.

Nice interview with the 93 year old Milton Friedman

Sobran Column --- Remembering Gene McCarthy

Session shows what ails Congress

Typically fine reporting from Robert Novak.

In Hoc Anno Domini

Vermont Royster's annual Christmas message.

In Sign of Conservative Split, a Commentator Is Dismissed - New York Times


Bruce Bartlett gets some publicity for his upcoming book on the Bush presidency.

OPENING ARGUMENT: Does Miers Have What It Takes To Excel On the Bench? (10/17/2005)


Stuart Taylor in the National Journal has a good summary of the Miers nomination: quite a "Bush-lite" action.

Wall Street Journal -- John Fund on the Trail I hired John Fund for one of his first jobs out of school, and I trust his judgment. Interesting take on Harriet Miers. Read and weep for the prospects of restoring the lost constitution.

Katrina exposes the Republicans as socialists

Bush tries to out-do FDR domestically.

An Unnatural Disaster: A Hurricane Exposes the Man-Made Disaster of the Welfare State

Hurricane Katrina triggers time extension relief. The relevant IRS Rev. Proc. is here. (pdf file)

The relevant material begins on page 1073 and provides for an 120 day extension to either the 45 day or 180 day deadlines.

Check out Fred Smith's plea to Lousiania to shape up its act.

Federal Reserve Bank of Minneapolis - Consumer Price Index Calculator

Let's see now. A $100 bill would buy about $20 in 1971 goods; about $5 in 1913 goods (the year the Fed was created). Not a great track record. It is reasonably clear why the savings rate is near zero: persons who save the monetary unit have their savings wiped out.

Jude Wanniski: "Starvation and Death in Niger"

1031 Question

The question is: Can a piece of property identified and contracted for, but not yet closed on, be used in the exchange of the proceeds from the sale of an original property which would be sold after the date of the new properties contract but prior to the closing on the new property?

Yes. The dates of the contracts are not relevant. The relevant dates are the dates of transfer of title of the respective properties. As long as prior to the closing on the relinquished property an exchange agreement is executed calling for the proceeds of the first closing going to the qualified intermediary and then a second closing within 180 days from the first whereby the funds are paid into closing and the exchangor receives the repalcement property, the requirements of the safe harbor regulations are met.

John G. Roberts and the New Federalism: William J. Wadkins Jr.

Roberts will get skewered over this. It will be interesting to see if he can face this issue straight on: Such as "Well, Senator So and So, are you suggesting that the commerce clause which to quote the constitution gives Congress the power 'to regulate commerce with foreign nations, and among the several states, and with the Indian tribes' grants Congress the right to regulate non-commerce, not among the states?"

OpinionJournal -- Who Will Judge the Inquisitors?
John Roberts isn't the only one who should come in for questioning.

BY RICHARD A. EPSTEIN
>

FindLaw's Writ - Dean: The U.S. Supreme Court's Holding in Kelo v. City of New London An Interview that Reveals an Insider's Perspective