In a reverse 1031 exchange, the qualified intermediary forms an entity that acts as a straw man to acquire the replacement property.
Exchange Accommodation Title-Holder
That straw man is called an Exchange Accommodation Title-Holder (EAT). This EAT typically holds title to the replacement property until the old relinquished property is disposed of and then the EAT (or straw man) deeds the property to the exchangor to complete their like-kind exchange.
The sad situation is that the Exchange Accommodation Title-Holders already paid deed tax once when it received the parked property from the seller and now is being subjected to transfer tax again when the replacement property is deeded to the exchangor.
Some states are very aggressive in taxing the transfer of the parked replacement property to the exchangor in what’s called deed tax or transfer tax. Not all states are as aggressive as say Pennsylvania or Wisconsin in collecting deed tax from the intermediaries entity to the exchangor.
In Minnesota, the Minnesota Department of Revenue has been much more accommodating in limiting the transfer tax to the value of the exchange services provided by the exchange accommodation title holder. Other states are imposing the transfer tax on the entire value of the property being conveyed.