1031 Exchange - S Corp

[Larry Daniels]

Hi all,

Long time reader/first time poster.

A family member owns residential rental property in an S-corp which owns several rental properties.  One of those properties has been sold with the funds from the sale currently being held by a QI for a 1031 exchange.

However, we'd like to be able to purchase the replacement property in a newly formed LLC (not the S-corp), but with the S-corp being the sole member of the new LLC.

Is this allowed? A CPA friend there may be some hiccups due to the S-corp nature of the entity.  Is this true?  Is there a relevant citation under the code I should refer to?

Thanks a lot - I'd appreciate any and all feedback .