Structure · not an offering · not investment advice
DST as replacement property
A Delaware statutory trust interest can be replacement property in a 1031 on the facts of Rev. Rul. 2004-86. That ruling is about tax classification and like-kind character. It is not a sponsor pitch, not a yield, and not a finding that any current trust matches the ruling. This page restates the holdings and the trustee-power list in the ruling. A QI listing on The QI File remains a custody file. DST interests offered to investors are typically securities.
What Rev. Rul. 2004-86 holds
Rev. Rul. 2004-86, 2004-2 C.B. 191 (I.R.B. 2004-33): (1) the Delaware statutory trust described in the ruling is an investment trust under Treas. Reg. §301.7701-4(c) that will be classified as a trust for federal tax purposes; (2) a taxpayer may exchange real property for an interest in that trust without recognition of gain or loss under §1031 if the other requirements of §1031 are satisfied.
On those facts, exchanging real property for the DST interest through a qualified intermediary is treated as exchanging real property for an interest in the underlying real property (Blackacre), not as exchanging for a certificate of trust or beneficial interest that would have been excluded under the then-applicable §1031(a)(2)(E). The ruling distinguishes Rev. Rul. 78-371 and Rev. Rul. 92-105.
Trustee powers that blow the ruling’s facts
The ruling states that if the trustee has additional powers under the trust agreement — including the power to (i) dispose of the property and acquire new property; (ii) renegotiate the lease or enter into leases with other tenants; (iii) renegotiate or refinance the obligation used to purchase the property; (iv) invest cash to profit from market fluctuations; or (v) make more than minor non-structural modifications not required by law — the DST will be a business entity which, if it has two or more owners, will be classified as a partnership unless another classification rule applies. Partnership interests are not the real-property exchange the ruling blessed.
Those five powers are the ruling’s list. This page does not invent a sixth or seventh “deadly sin,” a reserve percentage, or a sponsor fee. Read the private placement memorandum for the trust in front of you.
The QI’s job is still cash and paper
Identification, the 45/180 clocks, constructive receipt, and the exchange agreement do not go away because the replacement is a DST interest. The QI wires when the documents say to. The QI does not replace the PPM, the broker-dealer, or a suitability review. “DST: yes” on a QI File row means the QI published that it administers exchanges into DST interests — not that it underwrites the real estate. SeeQI custody vs DST offerings.
What this directory will not do
No sponsor listing is shipped with this page. No offering CTA. No invented yield, load, or occupancy figure. No Waterfalls, interval-fund, or other product-brand mix. If a sponsor file is added later, it will be labeled as a securities-offering file and kept off the QI table.
FAQ
Can a Delaware statutory trust interest be like-kind replacement property?
Rev. Rul. 2004-86 holds that, on the facts in that ruling, a taxpayer may exchange real property for an interest in the described Delaware statutory trust without recognition of gain or loss under §1031 if the other requirements of §1031 are satisfied. The ruling also holds that the described DST is an investment trust classified as a trust. Additional trustee powers listed in the ruling can cause partnership classification. The ruling is not an offering document and not a rating of any sponsor.
Does the QI sell the DST?
No. A QI listing on this site is a custody file. DST beneficial interests offered to investors are typically securities sold through a broker-dealer with a private placement memorandum. The QI’s job, if any, is to hold exchange proceeds and wire them when the exchange documents and the subscription say to. See QI custody vs DST offerings.
Are DST interests liquid?
This page does not invent a liquidity or yield figure. Read the offering documents for transfer restrictions, the trust term, and risk factors. Illiquidity is ordinary DST risk-factor language — read it as written. This directory will not turn a QI page into a DST marketplace.
Related
Sources
- Rev. Rul. 2004-86 — irs.gov/pub/irs-drop/rr-04-86.pdf and I.R.B. 2004-33. DST classification; §1031 exchange of real property for the described trust interest. Accessed 2026-09-11.
- 26 U.S.C. §1031(a) — current real-property-only nonrecognition. Cornell LII §1031. Accessed 2026-09-11.
- Treas. Reg. §1.1031(k)-1(g)(4) — QI as the exchange party that may receive proceeds, including on a DST replacement closing. Accessed 2026-09-11.
This page is not tax, legal, or investment advice. It is not an offer of any security or of exchange services. QI custody explainer, not a DST marketplace.