Answer
Sep 18, 2025 - 02:26 PM
The IRS requires the same LLC members to participate in the 721 exchange to meet the "same taxpayer" requirement. If members want to go their separate ways (cash vs. 721), a "drop and swap" structure needs to be set up in advance with guidance from a tax structuring attorney. The same taxpayers of the LLC must roll together to remain eligible; one person cashing out breaks the IRS's same taxpayer ID code.