When are taxes due in an unsuccessful 1031?

An investor who sells an investment property in the 2nd half of the tax year and does not utilize a 1031 exchange owes taxes on the gain in the quarter the sale occurs or by the tax return due date for that calendar year, depending on the year-to-year comparison of income and tax payments. If the investor had utilized a 1031 exchange, no tax would be owed unless the exchange was not fully successful. When is the tax due on a partial or fully unsuccessful 1031? The IRS allows a cash-basis investor to elect the installment method of reporting and paying taxes for all or part of the gain when an exchange lapses two tax years, the gain exceeds the mortgage satisfaction of the property sold, and the investor did not have constructive receipt of the exchange funds in the year the exchange began. Hence, a partial or fully unsuccessful exchange that began in the 2nd half of 2015 may not owe taxes until April 2017 if the unused 1031 funds were not released to the investor until 2016.