1031 exchange:
IRS1031ExchangeCH1
|
Table of Contents
Publication
Form (and Instructions)
See chapter 5 for information about getting publications and forms. The following discussions describe the kinds of transactions that are treated as sales or exchanges and explain how to figure gain or loss. A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. An exchange is a transfer of property for other property or services. Sale or lease. Some
agreements that seem to be leases may really be
conditional sales contracts. The intention of the
parties to the agreement can help you distinguish
between a sale and a lease.
There is no test or group of tests to
prove what the parties intended when they made the
agreement. You should consider each agreement based on
its own facts and circumstances. For more information on
leases, see chapter 4 in Publication 535, Business
Expenses.
Cancellation of a lease. Payments received by a
tenant for the cancellation of a lease are treated as an
amount realized from the sale of property. Payments
received by a landlord (lessor) for the cancellation of
a lease are essentially a substitute for rental payments
and are taxed as ordinary income in the year in which
they are received.
Copyright. Payments you receive for
granting the exclusive use of (or right to exploit) a
copyright throughout its life in a particular medium are
treated as received from the sale of property. It does
not matter if the payments are a fixed amount or a
percentage of receipts from the sale, performance,
exhibition, or publication of the copyrighted work, or
an amount based on the number of copies sold,
performances given, or exhibitions made. Nor does it
matter if the payments are made over the same period as
that covering the grantee's use of the copyrighted work.
If the copyright was used in your
trade or business and you held it longer than a year,
the gain or loss may be a section 1231 gain or loss. For
more information, see Section
1231 Gains and Losses in chapter 3.
Easement. The amount received for
granting an easement is subtracted from the basis of the
property. If only a specific part of the entire tract of
property is affected by the easement, only the basis of
that part is reduced by the amount received. If it is
impossible or impractical to separate the basis of the
part of the property on which the easement is granted,
the basis of the whole property is reduced by the amount
received.
Any amount received that is more than
the basis to be reduced is a taxable gain. The
transaction is reported as a sale of property.
If you transfer a perpetual easement
for consideration and do not keep any beneficial
interest in the part of the property affected by the
easement, the transaction will be treated as a sale of
property. However, if you make a qualified conservation
contribution of a restriction or easement granted in
perpetuity, it is treated as a charitable contribution
and not a sale or exchange, even though you keep a
beneficial interest in the property affected by the
easement.
If you grant an easement on your
property (for example, a right-of-way over it) under
condemnation or threat of condemnation, you are
considered to have made a forced sale, even though you
keep the legal title. Although you figure gain or loss
on the easement in the same way as a sale of property,
the gain or loss is treated as a gain or loss from a
condemnation. See Gain or Loss
From Condemnations, later.
Note's maturity date extended.
The extension of a note's maturity date is
not treated as an exchange of an outstanding note for a
new and different note. Also, it is not considered a
closed and completed transaction that would result in a
gain or loss. However, an extension will be treated as a
taxable exchange of the outstanding note for a new and
materially different note if the changes in the terms of
the note are significant. Each case must be determined
by its own facts.
Transfer on death. The
transfer of property to an executor or administrator on
the death of an individual is not a sale or exchange.
Bankruptcy. Generally, a
transfer of property from a debtor to a bankruptcy
estate is not treated as a sale or exchange. For more
information, see The Bankruptcy
Estate in Publication 908.
Gain or loss is usually realized when property is sold or exchanged. A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. A loss is the adjusted basis of the property that is more than the amount you realize. Table 1-1. How To Figure Whether You Have a Gain or Loss
Basis. You must know the basis of
your property to determine whether you have a gain or
loss from its sale or other disposition. The basis of
property you buy is usually its cost. However, if you
acquired the property by gift, inheritance, or in some
way other than buying it, you must use a basis other
than its cost. See Basis Other
Than Cost in Publication 551.
Adjusted basis. The
adjusted basis of property is your original cost or
other basis plus certain additions and minus certain
deductions, such as depreciation and casualty losses.
See Adjusted Basis
in Publication 551. In determining gain or
loss, the costs of transferring property to a new owner,
such as selling expenses, are added to the adjusted
basis of the property.
Amount realized. The
amount you realize from a sale or exchange is the total
of all money you receive plus the fair market value of
all property or services you receive. The amount you
realize also includes any of your liabilities that were
assumed by the buyer and any liabilities to which the
property you transferred is subject, such as real estate
taxes or a mortgage.
If the liabilities relate to an
exchange of multiple properties, see Treatment of liabilities
under Multiple Property
Exchanges, later.
Fair market value. Fair market
value (FMV) is the price at which the property would
change hands between a buyer and a seller when both have
reasonable knowledge of all the necessary facts and
neither has to buy or sell. If parties with adverse
interests place a value on property in an arm's-length
transaction, that is strong evidence of FMV. If there is
a stated price for services, this price is treated as
the FMV unless there is evidence to the contrary.
Example. You used a building in your business that cost you $70,000. You made certain permanent improvements at a cost of $20,000 and deducted depreciation totaling $10,000. You sold the building for $100,000 plus property having an FMV of $20,000. The buyer assumed your real estate taxes of $3,000 and a mortgage of $17,000 on the building. The selling expenses were $4,000. Your gain on the sale is figured as follows.
Amount recognized. Your
gain or loss realized from a sale or exchange of
property is usually a recognized gain or loss for tax
purposes. Recognized gains must be included in gross
income. Recognized losses are deductible from gross
income. However, your gain or loss realized from certain
exchanges of property is not recognized for tax
purposes. See Nontaxable
Exchanges, later. Also, a loss from the sale
or other disposition of property held for personal use
is not deductible, except in the case of a casualty or
theft.
Interest in property.
The amount you realize from the disposition
of a life interest in property, an interest in property
for a set number of years, or an income interest in a
trust is a recognized gain under certain circumstances.
If you received the interest as a gift, inheritance, or
in a transfer from a spouse or former spouse incident to
a divorce, the amount realized is a recognized gain.
Your basis in the property is disregarded. This rule
does not apply if all interests in the property are
disposed of at the same time.
Example 1. Your father dies and leaves his farm to you for life with a remainder interest to your younger brother. You decide to sell your life interest in the farm. The entire amount you receive is a recognized gain. Your basis in the farm is disregarded. Example 2. The facts are the same as in Example 1, except that your brother joins you in selling the farm. The entire interest in the property is sold, so your basis in the farm is not disregarded. Your gain or loss is the difference between your share of the sales price and your adjusted basis in the farm. Canceling a sale of real property. If you sell
real property under a sales contract that allows the
buyer to return the property for a full refund and the
buyer does so, you may not have to recognize gain or
loss on the sale. If the buyer returns the property in
the year of sale, no gain or loss is recognized. This
cancellation of the sale in the same year it occurred
places both you and the buyer in the same positions you
were in before the sale. If the buyer returns the
property in a later tax year, however, you must
recognize gain (or loss, if allowed) in the year of the
sale. When the property is returned in a later year, you
acquire a new basis in the property. That basis is equal
to the amount you pay to the buyer.
If you sell or exchange property for less than fair market value with the intent of making a gift, the transaction is partly a sale or exchange and partly a gift. You have a gain if the amount realized is more than your adjusted basis in the property. However, you do not have a loss if the amount realized is less than the adjusted basis of the property. Bargain sales to charity. A bargain sale of property
to a charitable organization is partly a sale or
exchange and partly a charitable contribution. If a
charitable deduction for the contribution is allowable,
you must allocate your adjusted basis in the property
between the part sold and the part contributed based on
the fair market value of each. The adjusted basis of the
part sold is figured as follows.
Example. You sold property with a fair market value of $10,000 to a charitable organization for $2,000 and are allowed a deduction for your contribution. Your adjusted basis in the property is $4,000. Your gain on the sale is $1,200, figured as follows.
If you sell or exchange property you used partly for business or rental purposes and partly for personal purposes, you must figure the gain or loss on the sale or exchange as though you had sold two separate pieces of property. You must allocate the selling price, selling expenses, and the basis of the property between the business or rental part and the personal part. You must subtract depreciation you took or could have taken from the basis of the business or rental part. Gain or loss on the business or rental part of the property may be a capital gain or loss or an ordinary gain or loss, as discussed in chapter 3 under Section 1231 Gains and Losses. Any gain on the personal part of the property is a capital gain. You cannot deduct a loss on the personal part. Example. You sold a condominium for $57,000. You had bought the property 9 years earlier in January for $30,000. You used two-thirds of it as your home and rented out the other third. You claimed depreciation of $3,272 for the rented part during the time you owned the property. You made no improvements to the property. Your selling expenses for the condominium were $3,600. You figure your gain or loss as follows.
You cannot deduct a loss on the sale of property you acquired for use as your home and used as your home until the time of sale. You can deduct a loss on the sale of property you acquired for use as your home but changed to business or rental property and used as business or rental property at the time of sale. However, if the adjusted basis of the property at the time of the change was more than its fair market value, the loss you can deduct is limited. Figure the loss you can deduct as follows.
The result in (4) is the loss you can deduct. Example. You changed your main home to rental property 5 years ago. At the time of the change, the adjusted basis of your home was $75,000 and the fair market value was $70,000. This year, you sold the property for $55,000. You made no improvements to the property but you have depreciation expense of $12,620 over the 5 prior years. Although your loss on the sale is $7,380 [($75,000 - $12,620) - $55,000], the amount you can deduct as a loss is limited to $2,380, figured as follows.
Gain. If you have a gain
on the sale, you generally must recognize the full
amount of the gain. You figure the gain by subtracting
your adjusted basis from your amount realized, as
described earlier.
You may be able to exclude all or
part of the gain if you owned and lived in the property
as your main home for at least 2 years during the 5-year
period ending on the date of sale. For more information,
see Publication 523.
The abandonment of property is a disposition of property. You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. Loss from abandonment of business or investment property is deductible as an ordinary loss, even if the property is a capital asset. The loss is the property's adjusted basis when abandoned. This rule also applies to leasehold improvements the lessor made for the lessee that were abandoned. However, if the property is later foreclosed on or repossessed, gain or loss is figured as discussed later. The abandonment loss is deducted in the tax year in which the loss is sustained. You cannot deduct any loss from abandonment of your home or other property held for personal use. Example. Ann abandoned her home that she bought for $200,000. At the time she abandoned the house, her mortgage balance was $185,000. She has a nondeductible loss of $200,000 (the adjusted basis). If the bank later forecloses on the loan or repossesses the house, she will have to figure her gain or loss as discussed later under Foreclosures and Repossessions. Cancellation of debt. If the abandoned property
secures a debt for which you are personally liable and
the debt is canceled, you will realize ordinary income
equal to the canceled debt. This income is separate from
any loss realized from abandonment of the property.
Report income from cancellation of a debt related to a
business or rental activity as business or rental
income. Report income from cancellation of a nonbusiness
debt as other income on Form 1040, line 21.
However, income from cancellation of
debt is not taxed if any of the following conditions
apply.
Forms 1099-A and 1099-C. If your abandoned property
secures a loan and the lender knows the property has
been abandoned, the lender should send you Form 1099-A
showing information you need to figure your loss from
the abandonment. However, if your debt is canceled and
the lender must file Form 1099-C, the lender may include
the information about the abandonment on that form
instead of on Form 1099-A. The lender must file Form
1099-C and send you a copy if the amount of debt
canceled is $600 or more and the lender is a financial
institution, credit union, federal government agency, or
any organization that has a significant trade or
business of lending money. For abandonments of property
and debt cancellations occurring in 2004, these forms
should be sent to you by January 31, 2005.
If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. This is true even if you voluntarily return the property to the lender. You also may realize ordinary income from cancellation of debt if the loan balance is more than the fair market value of the property. Buyer's (borrower's) gain or loss.
You figure and report gain or loss from a
foreclosure or repossession in the same way as gain or
loss from a sale or exchange. The gain or loss is the
difference between your adjusted basis in the
transferred property and the amount realized. See Gain or Loss From Sales and
Exchanges, earlier.
You can use Table 1-2 to figure your gain or loss from a foreclosure or repossession. Amount realized on a nonrecourse
debt. If you are not personally
liable for repaying the debt (nonrecourse debt) secured
by the transferred property, the amount you realize
includes the full debt canceled by the transfer. The
full canceled debt is included even if the fair market
value of the property is less than the canceled debt.
Example 1. Chris bought a new car for $15,000. He paid $2,000 down and borrowed the remaining $13,000 from the dealer's credit company. Chris is not personally liable for the loan (nonrecourse), but pledges the new car as security. The credit company repossessed the car because he stopped making loan payments. The balance due after taking into account the payments Chris made was $10,000. The fair market value of the car when repossessed was $9,000. The amount Chris realized on the repossession is $10,000. That is the debt canceled by the repossession, even though the car's fair market value is less than $10,000. Chris figures his gain or loss on the repossession by comparing the amount realized ($10,000) with his adjusted basis ($15,000). He has a $5,000 nondeductible loss. Example 2. Abena paid $200,000 for her home. She paid $15,000 down and borrowed the remaining $185,000 from a bank. Abena is not personally liable for the loan (nonrecourse debt), but pledges the house as security. The bank foreclosed on the loan because Abena stopped making payments. When the bank foreclosed on the loan, the balance due was $180,000, the fair market value of the house was $170,000, and Abena's adjusted basis was $175,000 due to a casualty loss she had deducted. The amount Abena realized on the foreclosure is $180,000, the debt canceled by the foreclosure. She figures her gain or loss by comparing the amount realized ($180,000) with her adjusted basis ($175,000). She has a $5,000 realized gain. Amount realized on a recourse
debt. If you are personally liable
for the debt (recourse debt), the amount realized on the
foreclosure or repossession does not include the
canceled debt that is your income from cancellation of
debt. However, if the fair market value of the
transferred property is less than the canceled debt, the
amount realized includes the canceled debt up to the
fair market value of the property. You are treated as
receiving ordinary income from the canceled debt for the
part of the debt that is more than the fair market
value. See Cancellation of
debt, later.
Example 1. Assume the same facts as in the previous Example 1, except Chris is personally liable for the car loan (recourse debt). In this case, the amount he realizes is $9,000. This is the canceled debt ($10,000) up to the car's fair market value ($9,000). Chris figures his gain or loss on the repossession by comparing the amount realized ($9,000) with his adjusted basis ($15,000). He has a $6,000 nondeductible loss. He also is treated as receiving ordinary income from cancellation of debt. That income is $1,000 ($10,000 - $9,000). This is the part of the canceled debt not included in the amount realized. Example 2. Assume the same facts as in the previous Example 2, except Abena is personally liable for the loan (recourse debt). In this case, the amount she realizes is $170,000. This is the canceled debt ($180,000) up to the fair market value of the house ($170,000). Abena figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($175,000). She has a $5,000 nondeductible loss. She also is treated as receiving ordinary income from cancellation of debt. That income is $10,000 ($180,000 - $170,000). This is the part of the canceled debt not included in the amount realized. Seller's (lender's) gain or loss on
repossession. If you finance a buyer's
purchase of property and later acquire an interest in it
through foreclosure or repossession, you may have a gain
or loss on the acquisition. For more information, see
Repossession in
Publication 537.
Table 1-2. Worksheet for Foreclosures and Repossessions (Keep for your records)
Cancellation of debt. If
property that is repossessed or foreclosed on secures a
debt for which you are personally liable (recourse
debt), you generally must report as ordinary income the
amount by which the canceled debt is more than the fair
market value of the property. This income is separate
from any gain or loss realized from the foreclosure or
repossession. Report the income from cancellation of a
debt related to a business or rental activity as
business or rental income. Report the income from
cancellation of a nonbusiness debt as other income on
Form 1040, line 21.
You can
use Table 1-2 to figure your income from cancellation of
debt.
However, income from cancellation of
debt is not taxed if any of the following conditions
apply.
Forms 1099-A and 1099-C. A lender who acquires an
interest in your property in a foreclosure or
repossession should send you Form 1099-A showing the
information you need to figure your gain or loss.
However, if the lender also cancels part of your debt
and must file Form 1099-C, the lender may include the
information about the foreclosure or repossession on
that form instead of on Form 1099-A. The lender must
file Form 1099-C and send you a copy if the amount of
debt canceled is $600 or more and the lender is a
financial institution, credit union, federal government
agency, or any organization that has a significant trade
or business of lending money. For foreclosures or
repossessions occurring in 2004, these forms should be
sent to you by January 31, 2005.
An involuntary conversion occurs when your property is destroyed, stolen, condemned, or disposed of under the threat of condemnation and you receive other property or money in payment, such as insurance or a condemnation award. Involuntary conversions are also called involuntary exchanges. Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes unless the property is your main home. You report the gain or deduct the loss on your tax return for the year you realize it. (You cannot deduct a loss from an involuntary conversion of property you held for personal use unless the loss resulted from a casualty or theft.) However, depending on the type of property you receive, you may not have to report a gain on an involuntary conversion. You do not report the gain if you receive property that is similar or related in service or use to the converted property. Your basis for the new property is the same as your basis for the converted property. This means that the gain is deferred until a taxable sale or exchange occurs. If you receive money or property that is not similar or related in service or use to the involuntarily converted property and you buy qualifying replacement property within a certain period of time, you can choose to postpone reporting the gain. This publication explains the treatment of a gain or loss from a condemnation or disposition under the threat of condemnation. If you have a gain or loss from the destruction or theft of property, see Publication 547. A condemnation is the process by which private property is legally taken for public use without the owner's consent. The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take it. The owner receives a condemnation award (money or property) in exchange for the property taken. A condemnation is like a forced sale, the owner being the seller and the condemning authority being the buyer. Example. A local government authorized to acquire land for public parks informed you that it wished to acquire your property. After the local government took action to condemn your property, you went to court to keep it. But, the court decided in favor of the local government, which took your property and paid you an amount fixed by the court. This is a condemnation of private property for public use. Threat of condemnation.
A threat of condemnation exists if a
representative of a government body or a public official
authorized to acquire property for public use informs
you that the government body or official has decided to
acquire your property. You must have reasonable grounds
to believe that, if you do not sell voluntarily, your
property will be condemned.
The sale of your property to someone
other than the condemning authority will also qualify as
an involuntary conversion, provided you have reasonable
grounds to believe that your property will be condemned.
If the buyer of this property knows at the time of
purchase that it will be condemned and sells it to the
condemning authority, this sale also qualifies as an
involuntary conversion.
Reports of condemnation.
A threat of condemnation exists if you learn
of a decision to acquire your property for public use
through a report in a newspaper or other news medium,
and this report is confirmed by a representative of the
government body or public official involved. You must
have reasonable grounds to believe that they will take
necessary steps to condemn your property if you do not
sell voluntarily. If you relied on oral statements made
by a government representative or public official, the
Internal Revenue Service may ask you to get written
confirmation of the statements.
Related property voluntarily sold.
A voluntary sale of your property may be
treated as a forced sale that qualifies as an
involuntary conversion if the property had a substantial
economic relationship to property of yours that was
condemned. A substantial economic relationship exists if
together the properties were one economic unit. You also
must show that the condemned property could not
reasonably or adequately be replaced. You can choose to
postpone reporting the gain by buying replacement
property. See Postponement of
Gain, later.
If your property was condemned or disposed of under the threat of condemnation, figure your gain or loss by comparing the adjusted basis of your condemned property with your net condemnation award. If your net condemnation award is more than the adjusted basis of the condemned property, you have a gain. You can postpone reporting gain from a condemnation if you buy replacement property. If only part of your property is condemned, you can treat the cost of restoring the remaining part to its former usefulness as the cost of replacement property. See Postponement of Gain, later. If your net condemnation award is less than your adjusted basis, you have a loss. If your loss is from property you held for personal use, you cannot deduct it. You must report any deductible loss in the tax year it happened. You can use Part 2 of Table 1-3 to figure your gain or loss from a condemnation award. Main home condemned. If
you have a gain because your main home is condemned, you
generally can exclude the gain from your income as if
you had sold or exchanged your home. You may be able to
exclude up to $250,000 of the gain (up to $500,000 if
married filing jointly). For information on this
exclusion, see Publication 523. If your gain is more
than you can exclude but you buy replacement property,
you may be able to postpone reporting the rest of the
gain. See Postponement of Gain,
later.
Table 1-3. Worksheet for Condemnations (Keep for your records)
Condemnation award. A
condemnation award is the money you are paid or the
value of other property you receive for your condemned
property. The award is also the amount you are paid for
the sale of your property under threat of condemnation.
Payment of your debts.
Amounts taken out of the award to pay your
debts are considered paid to you. Amounts the government
pays directly to the holder of a mortgage or lien
against your property are part of your award, even if
the debt attaches to the property and is not your
personal liability.
Interest on award.
If the condemning authority pays you
interest for its delay in paying your award, it is not
part of the condemnation award. You must report the
interest separately as ordinary income.
Payments to relocate.
Payments you receive to relocate and replace
housing because you have been displaced from your home,
business, or farm as a result of federal or federally
assisted programs are not part of the condemnation
award. Do not include them in your income. Replacement
housing payments used to buy new property are included
in the property's basis as part of your cost.
Net condemnation award.
A net condemnation award is the total award
you received, or are considered to have received, for
the condemned property minus your expenses of obtaining
the award. If only a part of your property was
condemned, you also must reduce the award by any special
assessment levied against the part of the property you
retain. This is discussed later under Special assessment taken out of
award.
Severance damages. Severance
damages are not part of the award paid for the property
condemned. They are paid to you if part of your property
is condemned and the value of the part you keep is
decreased because of the condemnation.
For example, you may receive
severance damages if your property is subject to
flooding because you sell flowage easement rights (the
condemned property) under threat of condemnation.
Severance damages also may be given to you if, because
part of your property is condemned for a highway, you
must replace fences, dig new wells or ditches, or plant
trees to restore your remaining property to the same
usefulness it had before the condemnation.
The contracting parties should agree
on the specific amount of severance damages in writing.
If this is not done, all proceeds from the condemning
authority are considered awarded for your condemned
property.
You cannot make a completely new
allocation of the total award after the transaction is
completed. However, you can show how much of the award
both parties intended for severance damages. The
severance damages part of the award is determined from
all the facts and circumstances.
Example. You sold part of your property to the state under threat of condemnation. The contract you and the condemning authority signed showed only the total purchase price. It did not specify a fixed sum for severance damages. However, at settlement, the condemning authority gave you closing papers showing clearly the part of the purchase price that was for severance damages. You may treat this part as severance damages. Treatment of severance
damages. Your net severance damages
are treated as the amount realized from an involuntary
conversion of the remaining part of your property. Use
them to reduce the basis of the remaining property. If
the amount of severance damages is based on damage to a
specific part of the property you kept, reduce the basis
of only that part by the net severance damages.
If your net severance damages are
more than the basis of your retained property, you have
a gain. You may be able to postpone reporting the gain.
See Postponement of Gain,
later.
You can
use Part 1 of Table 1-3 to figure any gain from
severance damages and to refigure the adjusted basis of
the remaining part of your property.
Net severance damages.
To figure your net severance damages, you
first must reduce your severance damages by your
expenses in obtaining the damages. You then reduce them
by any special assessment (described later) levied
against the remaining part of the property and taken out
of the award by the condemning authority. The balance is
your net severance damages.
Expenses of obtaining a condemnation
award and severance damages. Subtract
the expenses of obtaining a condemnation award, such as
legal, engineering, and appraisal fees, from the total
award. Also, subtract the expenses of obtaining
severance damages, that may include similar expenses,
from the severance damages paid to you. If you cannot
determine which part of your expenses is for each part
of the condemnation proceeds, you must make a
proportionate allocation.
Example. You receive a condemnation award and severance damages. One-fourth of the total was designated as severance damages in your agreement with the condemning authority. You had legal expenses for the entire condemnation proceeding. You cannot determine how much of your legal expenses is for each part of the condemnation proceeds. You must allocate one-fourth of your legal expenses to the severance damages and the other three-fourths to the condemnation award. Special assessment taken out of
award. When only part of your property
is condemned, a special assessment levied against the
remaining property may be taken out of your condemnation
award. An assessment may be levied if the remaining part
of your property benefited by the improvement resulting
from the condemnation. Examples of improvements that may
cause a special assessment are widening a street and
installing a sewer.
To figure your net condemnation
award, you generally reduce the award by the assessment
taken out of the award.
Example. To widen the street in front of your home, the city condemned a 25-foot deep strip of your land. You were awarded $5,000 for this and spent $300 to get the award. Before paying the award, the city levied a special assessment of $700 for the street improvement against your remaining property. The city then paid you only $4,300. Your net award is $4,000 ($5,000 total award minus $300 expenses in obtaining the award and $700 for the special assessment taken out). If the $700 special assessment were not taken out of the award and you were paid $5,000, your net award would be $4,700 ($5,000 - $300). The net award would not change, even if you later paid the assessment from the amount you received. Severance damages received.
If severance damages are included in the
condemnation proceeds, the special assessment taken out
is first used to reduce the severance damages. Any
balance of the special assessment is used to reduce the
condemnation award.
Example. You were awarded $4,000 for the condemnation of your property and $1,000 for severance damages. You spent $300 to obtain the severance damages. A special assessment of $800 was taken out of the award. The $1,000 severance damages are reduced to zero by first subtracting the $300 expenses and then $700 of the special assessment. Your $4,000 condemnation award is reduced by the $100 balance of the special assessment, leaving a $3,900 net condemnation award. Part business or rental. If you
used part of your condemned property as your home and
part as business or rental property, treat each part as
a separate property. Figure your gain or loss separately
because gain or loss on each part may be treated
differently.
Some examples of this type of
property are a building in which you live and operate a
grocery, and a building in which you live on the first
floor and rent out the second floor.
Example. You sold your building for $24,000 under threat of condemnation to a public utility company that had the authority to condemn. You rented half the building and lived in the other half. You paid $25,000 for the building and spent an additional $1,000 for a new roof. You claimed allowable depreciation of $4,600 on the rental half. You spent $200 in legal expenses to obtain the condemnation award. Figure your gain or loss as follows.
Do not report the gain on condemned property if you receive only property that is similar or related in service or use to the condemned property. Your basis for the new property is the same as your basis for the old. Money or unlike property received.
You ordinarily must report the gain if you
receive money or unlike property. You can choose to
postpone reporting the gain if you buy property that is
similar or related in service or use to the condemned
property within the replacement period, discussed later.
You also can choose to postpone reporting the gain if
you buy a controlling interest (at least 80%) in a
corporation owning property that is similar or related
in service or use to the condemned property. See Controlling interest in a
corporation, later.
To postpone reporting all the gain,
you must buy replacement property costing at least as
much as the amount realized for the condemned property.
If the cost of the replacement property is less than the
amount realized, you must report the gain up to the
unspent part of the amount realized.
The basis of the replacement property
is its cost, reduced by the postponed gain. Also, if
your replacement property is stock in a corporation that
owns property similar or related in service or use, the
corporation generally will reduce its basis in its
assets by the amount by which you reduce your basis in
the stock. See Controlling
interest in a corporation, later.
You can use Part 3 of Table 1-3 to figure the gain you must report and your postponed gain. Postponing gain on severance
damages. If you received severance
damages for part of your property because another part
was condemned and you buy replacement property, you can
choose to postpone reporting gain. See Treatment of severance damages,
earlier. You can postpone reporting all your
gain if the replacement property costs at least as much
as your net severance damages plus your net condemnation
award (if resulting in gain).
You also can make this choice if you
spend the severance damages, together with other money
you received for the condemned property (if resulting in
gain), to acquire nearby property that will allow you to
continue your business. If suitable nearby property is
not available and you are forced to sell the remaining
property and relocate in order to continue your
business, see Postponing gain
on the sale of related property, next.
If you restore the remaining property
to its former usefulness, you can treat the cost of
restoring it as the cost of replacement property.
Postponing gain on the sale of related
property. If you sell property that is
related to the condemned property and then buy
replacement property, you can choose to postpone
reporting gain on the sale. You must meet the
requirements explained earlier under Related property voluntarily sold.
You can postpone reporting all your gain if
the replacement property costs at least as much as the
amount realized from the sale plus your net condemnation
award (if resulting in gain) plus your net severance
damages, if any (if resulting in gain).
Buying replacement property from a
related person.
Certain taxpayers cannot postpone reporting
gain from a condemnation if they buy the replacement
property from a related person. For information on
related persons, see Nondeductible Loss under
Sales and Exchanges Between
Related Persons in chapter 2.
This rule applies to the following
taxpayers.
Exception. This
rule does not apply if the related person acquired the
property from an unrelated person within the replacement
period.
Advance payment. If you
pay a contractor in advance to build your replacement
property, you have not bought replacement property
unless it is finished before the end of the replacement
period (discussed later).
Replacement property. To
postpone reporting gain, you must buy replacement
property for the specific purpose of replacing your
condemned property. You do not have to use the actual
funds from the condemnation award to acquire the
replacement property. Property you acquire by gift or
inheritance does not qualify as replacement property.
Similar or related in service or
use. Your replacement property must
be similar or related in service or use to the property
it replaces.
If the condemned property is real
property you held for use in your trade or business or
for investment (other than property held mainly for
sale), but your replacement property is not similar or
related in service or use, it will be treated as such if
it is like-kind property to be held for use in a trade
or business or for investment. For a discussion of
like-kind property, see Like-Kind Property under
Like-Kind Exchanges,
later.
Owner-user. If you
are an owner-user, similar or related in service or use
means that replacement property must function in the
same way as the property it replaces.
Example. Your home was condemned and you invested the proceeds from the condemnation in a grocery store. Your replacement property is not similar or related in service or use to the condemned property. To be similar or related in service or use, your replacement property must also be used by you as your home. Owner-investor. If
you are an owner-investor, similar or related in service
or use means that any replacement property must have the
same relationship of services or uses to you as the
property it replaces. You decide this by determining all
the following information.
Example. You owned land and a building you rented to a manufacturing company. The building was condemned. During the replacement period, you had a new building built on other land you already owned. You rented out the new building for use as a wholesale grocery warehouse. The replacement property is also rental property, so the two properties are considered similar or related in service or use if there is a similarity in all the following areas.
Leasehold replaced with fee simple
property. Fee simple property you
will use in your trade or business or for investment can
qualify as replacement property that is similar or
related in service or use to a condemned leasehold if
you use it in the same business and for the identical
purpose as the condemned leasehold.
A fee simple property interest
generally is a property interest that entitles the owner
to the entire property with unconditional power to
dispose of it during his or her lifetime. A leasehold is
property held under a lease, usually for a term of
years.
Outdoor advertising display replaced
with real property. You can choose
to treat an outdoor advertising display as real
property. If you make this choice and you replace the
display with real property in which you hold a different
kind of interest, your replacement property can qualify
as like-kind property. For example, real property bought
to replace a destroyed billboard and leased property on
which the billboard was located qualifies as property of
a like kind.
You can make this choice only if you
did not claim a section 179 deduction for the display.
You cannot cancel this choice unless you get the consent
of the Internal Revenue Service.
An outdoor advertising display is a
sign or device rigidly assembled and permanently
attached to the ground, a building, or any other
permanent structure used to display a commercial or
other advertisement to the public.
Substituting replacement
property. Once you designate
certain property as replacement property on your tax
return, you cannot substitute other qualified property.
But, if your previously designated replacement property
does not qualify, you can substitute qualified property
if you acquire it within the replacement period.
Controlling interest in a
corporation.
You can replace property by acquiring a
controlling interest in a corporation that owns property
similar or related in service or use to your condemned
property. You have controlling interest if you own stock
having at least 80% of the combined voting power of all
classes of voting stock and at least 80% of the total
number of shares of all other classes of stock.
Basis adjustment to corporation's
property. The basis of property
held by the corporation at the time you acquired control
must be reduced by your postponed gain, if any. You are
not required to reduce the adjusted bases of the
corporation's properties below your adjusted basis in
the corporation's stock (determined after reduction by
your postponed gain).
Allocate this reduction to the
following classes of property in the order shown below.
Main home replaced. If
your gain from a condemnation of your main home is more
than you can exclude from your income (see Main home condemned under
Gain or Loss From
Condemnations, earlier), you can postpone
reporting the rest of the gain by buying replacement
property that is similar or related in service or use.
To postpone reporting all the gain, the replacement
property must cost at least as much as the amount
realized from the condemnation minus the excluded gain.
You must reduce the basis of your
replacement property by the postponed gain. Also, if you
postpone reporting any part of your gain under these
rules, you are treated as having owned and used the
replacement property as your main home for the period
you owned and used the condemned property as your main
home.
Replacement period. To
postpone reporting your gain from a condemnation, you
must buy replacement property within a certain period of
time. This is the replacement period.
The replacement period for a
condemnation begins on the earlier of the following
dates.
New York Liberty Zone property
condemned. If property in the New
York Liberty Zone was condemned as a result of the
September 11, 2001, terrorist attacks, the replacement
period ends 5 years after the end of the first tax year
in which any part of the gain on the condemnation is
realized. This 5-year replacement period applies only if
substantially all of the use of the replacement property
is in New York City.
Determining when gain is
realized. If you are a cash basis
taxpayer, you realize gain when you receive payments
that are more than your basis in the property. If the
condemning authority makes deposits with the court, you
realize gain when you withdraw (or have the right to
withdraw) amounts that are more than your basis.
This applies even if the amounts
received are only partial or advance payments and the
full award has not yet been determined. A replacement
will be too late if you wait for a final determination
that does not take place in the applicable replacement
period after you first realize gain.
For accrual basis taxpayers, gain (if
any) accrues in the earlier year when either of the
following occurs.
Replacement property bought before the
condemnation. If you buy your
replacement property after there is a threat of
condemnation but before the actual condemnation and you
still hold the replacement property at the time of the
condemnation, you have bought your replacement property
within the replacement period. Property you acquire
before there is a threat of condemnation does not
qualify as replacement property acquired within the
replacement period.
Example. On April 3, 2003, city authorities notified you that your property would be condemned. On June 5, 2003, you acquired property to replace the property to be condemned. You still had the new property when the city took possession of your old property on September 4, 2004. You have made a replacement within the replacement period. Extension. You can
get an extension of the replacement period if you apply
to the IRS director for your area. You should apply
before the end of the replacement period. Your
application should contain all details of your need for
an extension. You can file an application within a
reasonable time after the replacement period ends if you
can show reasonable cause for the delay. An extension of
the replacement period will be granted if you can show
reasonable cause for not making the replacement within
the regular period.
Ordinarily, requests for extensions
are granted near the end of the replacement period or
the extended replacement period. Extensions are usually
limited to a period of 1 year or less. The high market
value or scarcity of replacement property is not a
sufficient reason for granting an extension. If your
replacement property is being built and you clearly show
that the replacement or restoration cannot be made
within the replacement period, you will be granted an
extension of the period.
Choosing to postpone gain.
Report your choice to postpone reporting
your gain, along with all necessary details, on a
statement attached to your return for the tax year in
which you realize the gain.
If a partnership or a corporation
owns the condemned property, only the partnership or
corporation can choose to postpone reporting the gain.
Replacement property acquired after
return filed. If you buy the
replacement property after you file your return
reporting your choice to postpone reporting the gain,
attach a statement to your return for the year in which
you buy the property. The statement should contain
detailed information on the replacement property.
Amended return. If
you choose to postpone reporting gain, you must file an
amended return for the year of the gain (individuals
file Form 1040X) in either of the following situations.
Time for assessing a
deficiency. Any deficiency for any
tax year in which part of the gain is realized may be
assessed at any time before the expiration of 3 years
from the date you notify the IRS director for your area
that you have replaced, or intend not to replace, the
condemned property within the replacement period.
Changing your mind.
You can change your mind about reporting or
postponing the gain at any time before the end of the
replacement period.
Example. Your property was condemned and you had a gain of $5,000. You reported the gain on your return for the year in which you realized it, and paid the tax due. You buy replacement property within the replacement period. You used all but $1,000 of the amount realized from the condemnation to buy the replacement property. You now change your mind and want to postpone reporting the $4,000 of gain equal to the amount you spent for the replacement property. You should file a claim for refund on Form 1040X. Explain on Form 1040X that you previously reported the entire gain from the condemnation, but you now want to report only the part of the gain equal to the condemnation proceeds not spent for replacement property ($1,000). Generally, you report gain or loss from a condemnation on your return for the year you realize the gain or loss. Personal-use property.
Report gain from a condemnation of property
you held for personal use (other than excluded gain from
a condemnation of your main home or postponed gain) on
Schedule D (Form 1040).
Do not report loss from a
condemnation of personal-use property. But, if you
received a Form 1099-S, Proceeds From Real Estate
Transactions (for example, showing the proceeds of a
sale of real estate under threat of condemnation), you
must show the transaction on Schedule D even though the
loss is not deductible. Complete columns (a) through
(e), and enter -0- in column (f).
Certain exchanges of property are not taxable. This means any gain from the exchange is not recognized, and any loss cannot be deducted. Your gain or loss will not be recognized until you sell or otherwise dispose of the property you receive. The exchange of property for the same kind of property is the most common type of nontaxable exchange. To be a like-kind exchange, the property traded and the property received must be both of the following.
These two requirements are discussed later. Additional requirements apply to exchanges in which the property received is not received immediately upon the transfer of the property given up. See Deferred Exchange, later. If the like-kind exchange involves the receipt of money or unlike property or the assumption of your liabilities, you may have to recognize gain. See Partially Nontaxable Exchanges, later. Multiple-party transactions. The
like-kind exchange rules also apply to property
exchanges that involve three- and four-party
transactions. Any part of these multiple-party
transactions can qualify as a like-kind exchange if it
meets all the requirements described in this section.
Receipt of title from third
party. If you receive property in a
like-kind exchange and the other party who transfers the
property to you does not give you the title, but a third
party does, you still can treat this transaction as a
like-kind exchange if it meets all the requirements.
Basis of property received.
If you acquire property in a like-kind
exchange, the basis of that property is the same as the
basis of the property you transferred.
For the basis of property received in
an exchange that is only partially nontaxable, see Partially Nontaxable Exchanges,
later.
Money paid. If, in
addition to giving up like-kind property, you pay money
in a like-kind exchange, you still have no recognized
gain or loss. The basis of the property received is the
basis of the property given up, increased by the money
paid.
Example. Bill Smith trades an old cab for a new one. The new cab costs $30,000. He is allowed $8,000 for the old cab and pays $22,000 cash. He has no recognized gain or loss on the transaction regardless of the adjusted basis of his old cab. If Bill sold the old cab to a third party for $8,000 and bought a new one, he would have a recognized gain or loss on the sale of his old cab equal to the difference between the amount realized and the adjusted basis of the old cab. Sale and purchase. If
you sell property and buy similar property in two
mutually dependent transactions, you may have to treat
the sale and purchase as a single nontaxable exchange.
Example. You used your car in your business for 2 years. Its adjusted basis is $3,500 and its trade-in value is $4,500. You are interested in a new car that costs $20,000. Ordinarily, you would trade your old car for the new one and pay the dealer $15,500. Your basis for depreciation of the new car would then be $19,000 ($15,500 plus $3,500 adjusted basis of the old car). You want your new car to have a larger basis for depreciation, so you arrange to sell your old car to the dealer for $4,500. You then buy the new one for $20,000 from the same dealer. However, you are treated as having exchanged your old car for the new one because the sale and purchase are reciprocal and mutually dependent. Your basis for depreciation for the new car is $19,000, the same as if you traded the old car. Reporting the exchange.
Report the exchange of like-kind property,
even though no gain or loss is recognized, on Form 8824. The instructions
for the form explain how to report the details of the
exchange.
If you have any recognized gain
because you received money or unlike property, report it
on Schedule D (Form 1040) or Form 4797, whichever applies. See chapter 4.
You may have to report the recognized gain as ordinary
income from depreciation recapture. See Like-Kind Exchanges and Involuntary
Conversions in chapter 3.
Exchange expenses.
Exchange expenses are generally the closing
costs you pay. They include such items as brokerage
commissions, attorney fees, and deed preparation fees.
Subtract these expenses from the consideration received
to figure the amount realized on the exchange. Also, add
them to the basis of the like-kind property received. If
you receive cash or unlike property in addition to the
like-kind property and realize a gain on the exchange,
subtract the expenses from the cash or fair market value
of the unlike property. Then, use the net amount to
figure the recognized gain. See Partially Nontaxable Exchanges,
later.
In a like-kind exchange, both the property you give up and the property you receive must be held by you for investment or for productive use in your trade or business. Machinery, buildings, land, trucks, and rental houses are examples of property that may qualify. The rules for like-kind exchanges do not apply to exchanges of the following property.
However, you may have a nontaxable exchange under other rules. See Other Nontaxable Exchanges, later. An exchange of the assets of a business for the assets of a similar business cannot be treated as an exchange of one property for another property. Whether you engaged in a like-kind exchange depends on an analysis of each asset involved in the exchange. However, see Multiple Property Exchanges, later. There must be an exchange of like-kind property. Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. The exchange of real estate for real estate and the exchange of personal property for similar personal property are exchanges of like-kind property. For example, the trade of land improved with an apartment house for land improved with a store building, or a panel truck for a pickup truck, is a like-kind exchange. An exchange of personal property for real property does not qualify as a like-kind exchange. For example, an exchange of a piece of machinery for a store building does not qualify. Also, the exchange of livestock of different sexes does not qualify. Real property. An
exchange of city property for farm property, or improved
property for unimproved property, is a like-kind
exchange.
The exchange of real estate you own
for a real estate lease that runs 30 years or longer is
a like-kind exchange. However, not all exchanges of
interests in real property qualify. The exchange of a
life estate expected to last less than 30 years for a
remainder interest is not a like-kind exchange.
An exchange of a remainder interest
in real estate for a remainder interest in other real
estate is a like-kind exchange if the nature or
character of the two property interests is the same.
Foreign real property
exchanges. Real property located in
the United States and real property located outside the
United States are not considered like-kind property
under the like-kind exchange rules. If you exchange
foreign real property for property located in the United
States, your gain or loss on the exchange is recognized.
Foreign real property is real property not located in a
state or the District of Columbia.
This foreign real property exchange
rule does not apply to the replacement of condemned real
property. Foreign and U.S. real property can still be
considered like-kind property under the rules for
replacing condemned property to postpone reporting gain
on the condemnation. See Postponement of Gain
under Involuntary
Conversions, earlier.
Personal property.
Depreciable tangible personal property can
be either like kind or like class to qualify for
nonrecognition treatment. Like-class properties are
depreciable tangible personal properties within the same
General Asset Class or Product Class. Property
classified in any General Asset Class may not be
classified within a Product Class.
General Asset Classes.
General Asset Classes describe the types of
property frequently used in many businesses. They
include the following property.
Product Classes.
Product Classes include property listed in a
6-digit product class (except any ending in 9) in
sectors 31 through 33 of the North American Industry
Classification System (NAICS) of the Executive Office of
the President, Office of Management and Budget, United
States, 2002 (NAICS Manual). It can be accessed at .
Copies of the manual may be obtained from the National
Technical Information Service by calling 1-800- 553-NTIS
(1-800-553-6847). The cost of the manual is $49 (plus
shipping and handling) and the order number is
PB2002101430.
Intangible personal property and
nondepreciable personal property.
If you exchange intangible personal property
or nondepreciable personal property for like-kind
property, no gain or loss is recognized on the exchange.
(There are no like classes for these properties.)
Whether intangible personal property, such as a patent
or copyright, is of a like kind to other intangible
personal property generally depends on the nature or
character of the rights involved. It also depends on the
nature or character of the underlying property to which
those rights relate.
Goodwill and going concern.
The exchange of the goodwill or going
concern value of a business for the goodwill or going
concern value of another business is not a like-kind
exchange.
Foreign personal property
exchanges. Personal property used
predominantly in the United States and personal property
used predominantly outside the United States are not
like-kind property under the like-kind exchange rules.
If you exchange property used predominantly in the
United States for property used predominantly outside
the United States, your gain or loss on the exchange is
recognized.
Predominant use.
You determine the predominant use of
property you gave up based on where that property was
used during the 2-year period ending on the date you
gave it up. You determine the predominant use of the
property you acquired based on where that property was
used during the 2-year period beginning on the date you
acquired it.
But if you held either property less
than 2 years, determine its predominant use based on
where that property was used only during the period of
time you (or a related person) held it. This does not
apply if the exchange is part of a transaction (or
series of transactions) structured to avoid having to
treat property as unlike property under this rule.
However, you must treat property as
used predominantly in the United States if it is used
outside the United States but, under section 168(g)(4)
of the Internal Revenue Code, is eligible for
accelerated depreciation as though used in the United
States.
A deferred exchange is one in which you transfer property you use in business or hold for investment and later you receive like-kind property you will use in business or hold for investment. (The property you receive is replacement property.) The transaction must be an exchange (that is, property for property) rather than a transfer of property for money used to buy replacement property. If, before you receive the replacement property, you actually or constructively receive money or unlike property in full payment for the property you transfer, the transaction will be treated as a sale rather than a deferred exchange. In that case, you must recognize gain or loss on the transaction, even if you later receive the replacement property. (It would be treated as if you bought it.) You constructively receive money or unlike property when the money or property is credited to your account or made available to you. You also constructively receive money or unlike property when any limits or restrictions on it expire or are waived. Whether you actually or constructively receive money or unlike property, however, is determined without regard to certain arrangements you make to ensure that the other party carries out its obligation to transfer the replacement property to you. For example, if you have that obligation secured by a mortgage or by cash or its equivalent held in a qualified escrow account or qualified trust, that arrangement will be disregarded in determining whether you actually or constructively receive money or unlike property. For more information, see section 1.1031(k)-1(g) of the regulations. Also, see Like-Kind Exchanges Using Qualified Intermediaries, later. Identification requirement.
You must identify the property to be
received within 45 days
after the date you transfer the property given up in the
exchange. This period of time is called the
identification period. Any property received during the
identification period is considered to have been
identified.
If you transfer more than one
property (as part of the same transaction) and the
properties are transferred on different dates, the
identification period and the receipt period begin on
the date of the earliest transfer.
Identifying replacement
property. You must identify the
replacement property in a signed written document and
deliver it to the other person involved in the exchange.
You must clearly describe the replacement property in
the written document. For example, use the legal
description or street address for real property and the
make, model, and year for a car. In the same manner, you
can cancel an identification of replacement property at
any time before the end of the identification period.
Identifying alternative and multiple
properties. You can identify more
than one replacement property. Regardless of the number
of properties you give up, the maximum number of
replacement properties you can identify is the larger of
the following.
Disregard incidental property.
Do not treat property incidental to a larger
item of property as separate from the larger item when
you identify replacement property. Property is
incidental if it meets both the following tests.
Replacement property to be
produced.
Gain or loss from a deferred exchange can
qualify for nonrecognition even if the replacement
property is not in existence or is being produced at the
time you identify it as replacement property. If you
need to know the fair market value of the replacement
property to identify it, estimate its fair market value
as of the date you expect to receive it.
Receipt requirement.
The property must be received by the earlier
of the following dates.
Replacement property produced after
identification. In some cases, the
replacement property may have been produced after you
identified it (as described earlier in Replacement property to be
produced.) In that case, to determine
whether the property you received was substantially the
same property that met the identification requirement,
do not take into account any variations due to usual
production changes. Substantial changes in the property
to be produced, however, will disqualify it.
If your replacement property is
personal property that had to be produced, it must be
completed by the date you receive it to qualify as
substantially the same property you identified.
If your replacement property is real
property that had to be produced and it is not completed
by the date you receive it, it still may qualify as
substantially the same property you identified. It will
qualify only if, had it been completed on time, it would
have been considered to be substantially the same
property you identified. It is considered to be
substantially the same only to the extent it is
considered real property under local law. However, any
additional production on the replacement property after
you receive it does not qualify as like-kind property.
(To this extent, the transaction is treated as a taxable
exchange of property for services.)
If you transfer property through a qualified intermediary, the transfer of the property given up and receipt of like-kind property is treated as an exchange. This rule applies even if you receive money or other property directly from a party to the transaction other than the qualified intermediary. A qualified intermediary is a person who enters into a written exchange agreement with you to acquire and transfer the property you give up and to acquire the replacement property and transfer it to you. This agreement must expressly limit your rights to receive, pledge, borrow, or otherwise obtain the benefits of money or other property held by the qualified intermediary. Multiple-party transactions involving
related persons. A taxpayer who
transfers property given up to a qualified intermediary
in exchange for replacement property formerly owned by a
related person is not entitled to nonrecognition
treatment if the related person receives cash or unlike
property for the replacement property. (See Like-Kind Exchanges Between Related
Persons, later.)
A qualified intermediary cannot be either of the following.
An intermediary is treated as acquiring and transferring property if all the following requirements are met.
An intermediary is treated as entering into an agreement if the rights of a party to the agreement are assigned to the intermediary and all parties to that agreement are notified in writing of the assignment by the date of the relevant transfer of property. The like-kind exchange rules generally do not apply to an exchange in which you acquire replacement property (new property) before you transfer relinquished property (property you give up). However, if you use a qualified exchange accommodation arrangement (QEAA), the transfer may qualify as a like-kind exchange. Under a QEAA, either the replacement property or the relinquished property is transferred to an exchange accommodation titleholder (EAT), discussed later, who is treated as the beneficial owner of the property. However, the replacement property held in a QEAA may not be treated as property received in an exchange if you previously owned it within 180 days of its transfer to the EAT. If the property is held in a QEAA, the IRS will accept the qualification of property as either replacement property or relinquished property and the treatment of an EAT as the beneficial owner of the property for federal income tax purposes. Requirements for a QEAA.
Property is held in a QEAA only if all the
following requirements are met.
Written agreement.
Under a QEAA, you and the EAT must enter
into a written agreement no later than 5 business days
after the qualified indications of ownership (discussed
later) are transferred to the EAT. The agreement must
provide all the following.
Bona fide intent.
When the qualified indications of ownership
of the property are transferred to the EAT, it must be
your bona fide intent that the property held by the EAT
represents either replacement property or relinquished
property in an exchange intended to qualify for
nonrecognition of gain (in whole or in part) or loss
under the like-kind exchange rules.
Time limits for identifying and
transferring property. Under a QEAA, the
following time limits for identifying and transferring
the property must be met.
Exchange accommodation titleholder
(EAT). The EAT must meet all the
following requirements.
Qualified indications of
ownership. Qualified indications of
ownership are any of the following.
Other permissible arrangements.
Property will not fail to be treated as
being held in a QEAA as a result of certain legal or
contractual arrangements, regardless of whether the
arrangements contain terms that typically would result
from arm's-length bargaining between unrelated parties
for those arrangements. For a list of those
arrangements, see Revenue Procedure 2000-37 in Internal
Revenue Bulletin 2000-40.
If, in addition to like-kind property, you receive money or unlike property in an exchange on which you realize a gain, you have a partially nontaxable exchange. You are taxed on the gain you realize, but only to the extent of the money and the fair market value of the unlike property you receive. A loss is never deductible in a nontaxable exchange in which you receive unlike property or cash. Figuring taxable gain.
To figure the taxable gain, first determine
the fair market value of any unlike property you receive
and add it to any money you receive. Reduce that total
by any exchange expenses (closing costs) you paid. The
result is the maximum gain that can be taxed. Next,
figure the gain on the whole exchange as discussed
earlier under Gain or Loss From
Sales and Exchanges. Your recognized
(taxable) gain is the lesser of these two amounts.
Example. You exchange real estate held for investment with an adjusted basis of $8,000 for other real estate you want to hold for investment. The fair market value of the real estate you receive is $10,000. You also receive $1,000 in cash. You paid $500 in exchange expenses. Although the total gain realized on the transaction is $2,500, only $500 ($1,000 cash received minus the $500 exchange expenses) is recognized (included in your income). Assumption of liabilities. If the other party to a
nontaxable exchange assumes any of your liabilities, you
will be treated as if you received cash in the amount of
the liability. For more information on the assumption of
liabilities, see section 357(d) of the Internal Revenue
Code.
Example. The facts are the same as in the previous example, except the property you give up is subject to a $3,000 mortgage for which you were personally liable. The other party in the trade has agreed to pay off the mortgage. Figure the gain realized as follows.
The realized gain is taxed only up to $3,500, the sum of the cash received ($1,000 - $500 exchange expenses) and the mortgage ($3,000). Unlike property given up.
If, in addition to like-kind property, you
give up unlike property, you must recognize gain or loss
on the unlike property you give up. The gain or loss is
equal to the difference between the fair market value of
the unlike property and the adjusted basis of the unlike
property.
Example. You exchange stock and real estate you held for investment for real estate you also intend to hold for investment. The stock you transfer has a fair market value of $1,000 and an adjusted basis of $4,000. The real estate you exchange has a fair market value of $19,000 and an adjusted basis of $15,000. The real estate you receive has a fair market value of $20,000. You do not recognize gain on the exchange of the real estate because it qualifies as a nontaxable exchange. However, you must recognize (report on your return) a $3,000 loss on the stock because it is unlike property. Basis of property received.
The total basis for all properties (other
than money) you receive in a partially nontaxable
exchange is the total adjusted basis of the properties
you give up, with the following adjustments.
Under the like-kind exchange rules, you generally must make a property-by-property comparison to figure your recognized gain and the basis of the property you receive in the exchange. However, for exchanges of multiple properties, you do not make a property-by-property comparison if you do either of the following.
In these situations, you figure your recognized gain and the basis of the property you receive by comparing the properties within each exchange group. Exchange groups. Each
exchange group consists of properties transferred and
received in the exchange that are of like kind or like
class. (See Like-Kind Property,
earlier.) If property could be included in
more than one exchange group, you can include it in any
one of those groups. However, the following may not be
included in an exchange group.
Example. Ben exchanges computer A (asset class 00.12), automobile A (asset class 00.22), and truck A (asset class 00.241) for computer R (asset class 00.12), automobile R (asset class 00.22), truck R (asset class 00.241), and $550. All properties transferred were used in Ben's business. Similarly, all properties received will be used in his business. The first exchange group consists of computers A and R, the second exchange group consists of automobiles A and R, and the third exchange group consists of trucks A and R. Treatment of liabilities.
Offset all liabilities you assume as part of
the exchange against all liabilities of which you are
relieved. Offset these liabilities whether they are
recourse or nonrecourse and regardless of whether they
are secured by or otherwise relate to specific property
transferred or received as part of the exchange.
If you assume more liabilities than
you are relieved of, allocate the difference among the
exchange groups in proportion to the total fair market
value of the properties you received in the exchange
groups. The difference allocated to each exchange group
may not be more than the total fair market value of the
properties you received in the exchange group.
The amount of the liabilities
allocated to an exchange group reduces the total fair
market value of the properties received in that exchange
group. This reduction is made in determining whether the
exchange group has a surplus or a deficiency. (See Exchange group surplus and
deficiency, later.) This reduction is also
made in determining whether a residual group is created.
(See Residual group,
later.)
If you are relieved of more
liabilities than you assume, treat the difference as
cash, general deposit accounts (other than certificates
of deposit), and similar items when making allocations
to the residual group, discussed later.
The treatment of liabilities and any
differences between amounts you assume and amounts you
are relieved of will be the same even if the like-kind
exchange treatment applies to only part of a larger
transaction. If so, determine the difference in
liabilities based on all liabilities you assume or are
relieved of as part of the larger transaction.
Example. The facts are the same as in the preceding example. In addition, the fair market value of and liabilities secured by each property are as follows.
All liabilities assumed by Ben ($1,000) are offset by all liabilities of which he is relieved ($500), resulting in a difference of $500. The difference is allocated among Ben's exchange groups in proportion to the fair market value of the properties received in the exchange groups as follows.
In each exchange group, Ben uses the reduced fair market value of the properties received to figure the exchange group's surplus or deficiency and to determine whether a residual group has been created. Residual group. A
residual group is created if the total fair market value
of the properties transferred in all exchange groups
differs from the total fair market value of the
properties received in all exchange groups after taking
into account the treatment of liabilities (discussed
earlier). The residual group consists of money or other
property that has a total fair market value equal to
that difference. It consists of either money or other
property transferred in the exchange or money or other
property received in the exchange, but not both.
Other property includes the following
items.
Example. Fran exchanges computer A (asset class 00.12) and automobile A (asset class 00.22) for printer B (asset class 00.12), automobile B (asset class 00.22), corporate stock, and $500. Fran used computer A and automobile A in her business and will use printer B and automobile B in her business. This transaction results in two exchange groups: (1) computer A and printer B, and (2) automobile A and automobile B. The fair market values of the properties are as follows.
The total fair market value of the properties transferred in the exchange groups ($5,000) is $1,250 more than the total fair market value of the properties received in the exchange groups ($3,750), so there is a residual group in that amount. It consists of the $500 cash and the $750 worth of corporate stock. Exchange group surplus and
deficiency. For each exchange group, you
must determine whether there is an �exchange group surplus� or �exchange group deficiency.� An
exchange group surplus is the total fair market value of
the properties received in an exchange group (minus any
excess liabilities you assume that are allocated to that
exchange group) that is more than the total fair market
value of the properties transferred in that exchange
group. An exchange group deficiency is the total fair
market value of the properties transferred in an
exchange group that is more than the total fair market
value of the properties received in that exchange group
(minus any excess liabilities you assume that are
allocated to that exchange group).
Example. Karen exchanges computer A (asset class 00.12) and automobile A (asset class 00.22), both of which she used in her business, for printer B (asset class 00.12) and automobile B (asset class 00.22), both of which she will use in her business. Karen's adjusted basis and the fair market value of the exchanged properties are as follows.
The first exchange group consists of computer A and printer B. It has an exchange group surplus of $1,050 because the fair market value of printer B ($2,050) is more than the fair market value of computer A ($1,000) by that amount. The second exchange group consists of automobile A and automobile B. It has an exchange group deficiency of $1,050 because the fair market value of automobile A ($4,000) is more than the fair market value of automobile B ($2,950) by that amount. Recognized gain. Gain
or loss realized for each exchange group and the
residual group is the difference between the total fair
market value of the transferred properties in that
exchange group or residual group and the total adjusted
basis of the properties. For each exchange group,
recognized gain is the lesser of the gain realized or
the exchange group deficiency (if any). Losses are not
recognized for an exchange group. The total gain
recognized on the exchange of like-kind or like-class
properties is the sum of all the gain recognized for
each exchange group.
For a residual group, you must
recognize the entire gain or loss realized.
For properties you transfer that are
not within any exchange group or the residual group,
figure realized and recognized gain or loss as explained
under Gain or Loss From Sales
and Exchanges, earlier.
Example. Based on the facts in the previous example, Karen recognizes gain on the exchange as follows. For the first exchange group, the gain realized is the fair market value of computer A ($1,000) minus its adjusted basis ($375), or $625. The gain recognized is the lesser of the gain realized ($625) or the exchange group deficiency ($0), or $0. For the second exchange group, the gain realized is the fair market value of automobile A ($4,000) minus its adjusted basis ($1,500), or $2,500. The gain recognized is the lesser of the gain realized ($2,500) or the exchange group deficiency ($1,050), or $1,050. The total gain recognized by Karen in the exchange is the sum of the gains recognized with respect to both exchange groups ($0 + $1,050), or $1,050. Basis of properties received.
The total basis of properties received in
each exchange group is the sum of the following amounts.
Example. Based on the facts in the two previous examples, the bases of the properties received by Karen in the exchange, printer B and automobile B, are determined in the following manner. The basis of the property received in the first exchange group is $1,425. This is the sum of the following amounts.
Printer B is the only property received within the first exchange group, so the entire basis of $1,425 is allocated to printer B. The basis of the property received in the second exchange group is $1,500. This is figured as follows. First, add the following amounts.
Then subtract the exchange group deficiency ($1,050). Automobile B is the only property received within the second exchange group, so the entire basis ($1,500) is allocated to automobile B. Special rules apply to like-kind exchanges between related persons. These rules affect both direct and indirect exchanges. Under these rules, if either person disposes of the property within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. The gain or loss on the original exchange must be recognized as of the date of the later disposition. Related persons. Under these rules, related
persons include, for example, you and a member of your
family (spouse, brother, sister, parent, child, etc.),
you and a corporation in which you have more than 50%
ownership, you and a partnership in which you directly
or indirectly own more than a 50% interest of the
capital or profits, and two partnerships in which you
directly or indirectly own more than 50% of the capital
interests or profits.
An
exchange structured to avoid the related party rules is
not a like-kind exchange. See Like-Kind Exchanges Using
Qualified Intermediaries , earlier.
For more information on related
persons, see Nondeductible Loss
under Sales and
Exchanges Between Related Persons in chapter
2.
Example. You used a panel truck in your house painting business. Your sister used a pickup truck in her landscaping business. In December 2003, you exchanged your panel truck plus $200 for your sister's pickup truck. At that time, the fair market value (FMV) of your panel truck was $7,000 and its adjusted basis was $6,000. The fair market value of your sister's pickup truck was $7,200 and its adjusted basis was $1,000. You realized a gain of $1,000 (the $7,200 fair market value of the pickup truck minus the $200 you paid minus the $6,000 adjusted basis of the panel truck). Your sister realized a gain of $6,200 (the $7,000 fair market value of your panel truck plus the $200 you paid minus the $1,000 adjusted basis of the pickup truck). However, because this was a like-kind exchange, you recognized no gain. Your basis in the pickup truck was $6,200 (the $6,000 adjusted basis of the panel truck plus the $200 you paid). Your sister recognized gain only to the extent of the money she received, $200. Her basis in the panel truck was $1,000 (the $1,000 adjusted basis of the pickup truck minus the $200 received, plus the $200 gain recognized). In 2004, you sold the pickup truck to a third party for $7,000. You sold it within 2 years after the exchange, so the exchange is disqualified from nonrecognition treatment. On your 2004 tax return, you must report your $1,000 gain on the 2003 exchange. You also report a loss on the sale of $200 (the adjusted basis of the pickup truck, $7,200 (its $6,200 basis plus the $1,000 gain recognized), minus the $7,000 realized from the sale). In addition, your sister must report on her 2004 tax return the $6,000 balance of her gain on the 2003 exchange. Her adjusted basis in the panel truck is increased to $7,000 (its $1,000 basis plus the $6,000 gain recognized). Two-year holding period.
The 2-year holding period begins on the date
of the last transfer of property that was part of the
like-kind exchange. If the holder's risk of loss on the
property is substantially diminished during any period,
however, that period is not counted toward the 2-year
holding period. The holder's risk of loss on the
property is substantially diminished by any of the
following events.
Exceptions to the rules for related
persons. The following kinds of property
dispositions are excluded from these rules.
The following discussions describe other exchanges that may not be taxable. Exchanges of partnership interests do not qualify as nontaxable exchanges of like-kind property. This applies regardless of whether they are general or limited partnership interests or are interests in the same partnership or different partnerships. However, under certain circumstances the exchange may be treated as a tax-free contribution of property to a partnership. See Contribution of Property in Publication 541, Partnerships. An interest in a partnership that has a valid choice in effect under section 761(a) of the Internal Revenue Code to be excluded from all the rules of Subchapter K of the Code is treated as an interest in each of the partnership assets and not as a partnership interest. See Exclusion From Partnership Rules in Publication 541. Certain issues of U.S. Treasury obligations may be
exchanged for certain other issues designated by the
Secretary of the Treasury with no gain or loss
recognized on the exchange. See U.S. Treasury Bills, Notes, and Bonds
under Interest
Income in Publication 550 for more
information on the tax treatment of income from these
investments. For other information on these notes and bonds, call the Bureau of the Public Debt at 1-800-722-2678, or write to the following address. Bureau of the Public Debt
No gain or loss is recognized if you make any of the following exchanges.
If you realize a gain on the exchange of an endowment contract or annuity contract for a life insurance contract or an exchange of an annuity contract for an endowment contract, you must recognize the gain. For information on transfers and rollovers of employer-provided annuities, see Publication 575, Pension and Annuity Income, or Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). Cash received. The
nonrecognition and nontaxable transfer rules do not
apply to a rollover in which you receive cash proceeds
from the surrender of one policy and invest the cash in
another policy. However, you can treat a cash
distribution and reinvestment as meeting the
nonrecognition or nontaxable transfer rules if all the
following requirements are met.
If you transfer property to a corporation in exchange for stock in that corporation (other than nonqualified preferred stock, described later), and immediately afterward you are in control of the corporation, the exchange is usually not taxable. This rule applies both to individuals and to groups who transfer property to a corporation. It does not apply in the following situations.
Control of a corporation.
To be in control of a corporation, you or
your group of transferors must own, immediately after
the exchange, at least 80% of the total combined voting
power of all classes of stock entitled to vote and at
least 80% of the outstanding shares of each class of
nonvoting stock.
The
control requirement can be met even though there are
successive transfers of property and stock. For more
information, see Revenue Ruling 2003-51 in Internal
Revenue Bulletin No. 2003-21.
Example 1. You and Bill Jones buy property for $100,000. You both organize a corporation when the property has a fair market value of $300,000. You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. No gain is recognized by you, Bill, or the corporation. Example 2. You and Bill transfer the property with a basis of $100,000 to a corporation in exchange for stock with a fair market value of $300,000. This represents only 75% of each class of stock of the corporation. The other 25% was already issued to someone else. You and Bill recognize a taxable gain of $200,000 on the transaction. Services rendered. The
term property does not include services rendered or to
be rendered to the issuing corporation. The value of
stock received for services is income to the recipient.
Example. You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. Right after the exchange, you own 85% of the outstanding stock. No gain is recognized on the exchange of property. However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation. Property of relatively small value.
The term property does not include property
of a relatively small value when it is compared to the
value of stock and securities already owned or to be
received for services by the transferor if the main
purpose of the transfer is to qualify for the
nonrecognition of gain or loss by other transferors.
Property transferred will not be
considered to be of relatively small value if its fair
market value is at least 10% of the fair market value of
the stock and securities already owned or to be received
for services by the transferor.
Stock received in disproportion to
property transferred. If a group of
transferors exchange property for corporate stock, each
transferor does not have to receive stock in proportion
to his or her interest in the property transferred. If a
disproportionate transfer takes place, it will be
treated for tax purposes in accordance with its true
nature. It may be treated as if the stock were first
received in proportion and then some of it used to make
gifts, pay compensation for services, or satisfy the
transferor's obligations.
Money or other property received.
If, in an otherwise nontaxable exchange of
property for corporate stock, you also receive money or
property other than stock, you may have to recognize
gain. You must recognize gain only up to the amount of
money plus the fair market value of the other property
you receive. The rules for figuring the recognized gain
in this situation generally follow those for a partially
nontaxable exchange discussed earlier under Like-Kind Exchanges. If
the property you give up includes depreciable property,
the recognized gain may have to be reported as ordinary
income from depreciation. See chapter 3. No loss is
recognized.
Nonqualified preferred stock.
Nonqualified preferred stock is treated as
property other than stock. Generally, it is preferred
stock with any of the following features.
Liabilities.
If the corporation assumes your liabilities,
the exchange generally is not treated as if you received
money or other property. There are two exceptions to
this treatment.
Example. You transfer property to a corporation for stock. Immediately after the transfer, you control the corporation. You also receive $10,000 in the exchange. Your adjusted basis in the transferred property is $20,000. The stock you receive has a fair market value (FMV) of $16,000. The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. Gain is realized as follows.
No gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or a former spouse if incident to divorce. This rule does not apply to the following.
Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. The recipient's basis in the property will be the same as the adjusted basis of the property to the giver immediately before the transfer. This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its fair market value at the time of transfer or any consideration paid by the recipient. This rule applies for determining loss as well as gain. Any gain recognized on a transfer in trust increases the basis. For more information on transfers to a spouse, see Property Settlements in Publication 504, Divorced or Separated Individuals. You can choose to roll over a capital gain from the sale of publicly traded securities (securities traded on an established securities market) into a specialized small business investment company (SSBIC). If you make this choice, the gain from the sale is recognized only to the extent the amount realized is more than the cost of the SSBIC common stock or partnership interest bought during the 60-day period beginning on the date of the sale. You must reduce your basis in the SSBIC stock or partnership interest by the gain not recognized. The gain that can be rolled over during any tax year is limited. For individuals, the limit is the lesser of the following amounts.
For more information, see chapter 4 of Publication 550. For C corporations, the limit is the lesser of the following amounts.
If you sell qualified small business stock, you may be able to roll over your gain tax free or exclude part of the gain from your income. Qualified small business stock is stock originally issued by a qualified small business after August 10, 1993, that meets all 7 tests listed in chapter 4 of Publication 550. Rollover of gain. You
can choose to roll over a capital gain from the sale of
qualified small business stock held longer than 6 months
into other qualified small business stock. This choice
is not allowed to C corporations. If you make this
choice, the gain from the sale generally is recognized
only to the extent the amount realized is more than the
cost of the replacement qualified small business stock
bought within 60 days of the date of sale. You must
reduce your basis in the replacement qualified small
business stock by the gain not recognized.
Exclusion of gain. You
may be able to exclude from your gross income one-half
your gain from the sale or exchange of qualified small
business stock held by you longer than 5 years. This
exclusion is not allowed to C corporations. Different
rules apply when the stock is held by a partnership, S
corporation, regulated investment company, or common
trust fund.
Your gain that is eligible for the
exclusion from the stock of any one issuer is limited to
the greater of the following amounts.
You may qualify for a tax-free rollover of certain gains from the sale of qualified empowerment zone assets. This means that if you buy certain replacement property and make the choice described in this section, you postpone part or all of the recognition of your gain. You can make this choice if you meet all the following tests.
Any part of the gain that is ordinary income cannot be postponed and must be recognized. Qualified empowerment zone asset.
This means certain stock or partnership
interests in an enterprise zone business. It also
includes certain tangible property used in an enterprise
zone business. You must have acquired the asset after
December 21, 2000.
Amount of gain recognized.
If you make the choice described in this
section, you must recognize gain only up to the
following amount:
If you sold or exchanged a District of Columbia Enterprise Zone (DC Zone) asset that you held for more than 5 years, you may be able to exclude the �qualified capital gain�. The qualified gain is, generally, any gain recognized in a trade or business that you would otherwise include on Form 4797, Part I. This exclusion also applies to an interest in, or property of, certain businesses operating in the District of Columbia. DC Zone asset. A DC
Zone asset is any of the following:
Qualified capital gain.
The qualified capital gain is any gain
recognized on the sale or exchange of a DC Zone asset
that is a capital asset or property used in a trade or
business. It does not include any of the following
gains.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAQs
Capital Gains Tax Example An example of how capital gains is estimated in a ...Read More
Can I exchange a business--UPS Store Example It is possible to exchange a business-but there ar ...Read More
Capital Gains State Tax Rates Find the Capital Gains Tax Rate for your state! ...Read More
How Often can I take Advantage of the Tax Exclusion Under IRC section 121? 121 tax exclusion ...Read More
200 Percent Identification Rule What if the property value increases? Is the ID v ...Read More
Subdividing question Can I subdivide? ...Read More
Tax Free Cash How can I take cash out? ...Read More
Capital Gains Exclusion??? Mixing up Section 121 and Section 1031 ...Read More
More on Capital Gains Question about Capital Gains. ...Read More
Taking Cash Out of a 1031 exchange What about taking cash out of a 1031 exchange? ...Read More
Accumulated Depreciation How do I handle depreciation? ...Read More
Lease Options How do I handle rent money? ...Read More
Dual Use of Property Primary residence and? ...Read More
Since 1994!
Member, Bonded & Insured
- Home
- New: Podcasts
Listen and Learn about 1031 exchanges! - Free:
List Your Property! - Tax-Free Cash
from your property! - My state tax rate
- 1031 Exchange Summary
- 1031 History
- FORM 8824 Help
- Client FAQs
- Custom Newsletters for clients!
- Exchange Types
- Exchange Fees
- About Us
- Affiliate Program
- Join Our Network
- Newsletter Sign-up
- Contact Us
- Newest Pages
- Dual Use of Property
- Three Tax Strategies to Maximize Tax Savings
- Online help for completing IRS Form 8824
- Principal Residence Considerations
- Lease Options
- Accumulated Depreciation
- Taking Cash Out of a 1031 exchange
- More on Capital Gains
- Capital Gains Exclusion???
- Exchange Basics
- Increasing Basis
- Tax Free Cash
- Subdividing question
- 200 Percent Identification Rule
- How Often can I take Advantage of the Tax Exclusion Under IRC section 121?
- Capital Gains State Tax Rates
- RELATED PARTY 1031 EXCHANGES FULL OF SUBTLETIES
- Can I exchange a business--UPS Store Example
- Extend 1031 Exchange Deadlines
- One Spouse or Two
- Capital Gains Tax Example
- FunTaxGear.com
- Site Map
- State Pages
- Alabama 1031 Exchange
- Alaska 1031 Exchange
- Arizona 1031 Exchange
- Arkansas 1031 Exchange
- California 1031 Exchange
- Colorado 1031 Exchange
- Connecticut 1031 Exchange
- Delaware 1031 Exchange
- D.C. 1031 Exchange
- Florida 1031 Exchange
- Georgia 1031 Exchange
- Hawaii 1031 Exchange
- Idaho 1031 Exchange
- Illinois 1031 Exchange
- Indiana 1031 Exchange
- Iowa 1031 Exchange
- Kansas 1031 Exchange
- Kentucky 1031 Exchange
- Louisiana 1031 Exchange
- Maine 1031 Exchange
- Maryland 1031 Exchange
- Massachusetts 1031 Exchange
- Michigan 1031 Exchange
- Minnesota 1031 Exchange
- Mississippi 1031 Exchange
- Missouri 1031 Exchange
- Montana 1031 Exchange
- Nebraska 1031 Exchange
- Nevada 1031 Exchange
- New Hampshire 1031 Exchange
- New Jersey 1031 Exchange
- New Mexico 1031 Exchange
- New York 1031 Exchange
- North Carolina 1031 Exchange
- North Dakota 1031 Exchange
- Ohio 1031 Exchange
- Oklahoma 1031 Exchange
- Oregon 1031 Exchange
- Pennsylvania 1031 Exchange
- Rhode Island 1031 Exchange
- South Carolina 1031 Exchange
- South Dakota 1031 Exchange
- Tennessee 1031 Exchange
- Texas 1031 Exchange
- Utah 1031 Exchange
- Vermont 1031 Exchange
- Virginia 1031 Exchange
- Washington 1031 Exchange
- West Virginia 1031 Exchange
- Wisconsin 1031 Exchange
- Wyoming 1031 Exchange