| Generally, if you exchange business or investment property solely
for business or investment property of a like-kind, no gain or loss is
recognized under Internal Revenue Code Section 1031. If, as part of the
exchange, you also receive other (not like-kind) property or money, gain
is recognized to the extent of the other property and money received,
but a loss is not recognized. Section 1031 does not apply to exchanges
of inventory, stocks, bonds, notes, other securities or evidence of
indebtedness, or certain other assets.
Like-Kind Property
Properties are of like-kind, if they are of the same nature or
character, even if they differ in grade or quality. Personal properties
of a like class are like-kind properties. However, livestock of
different sexes are not like-kind properties. Also, personal property
used predominantly in the United States and personal property used
predominantly outside the United States are not like-kind properties.
Real properties generally are of like-kind, regardless of whether the
properties are improved or unimproved. However, real property in the
United States and real property outside the United States are not
like-kind properties.
References/Related Topics
Note: This page contains one or more references
to the Internal Revenue Code (IRC), Treasury Regulations, court cases,
or other official tax guidance. References to these legal authorities
are included for the convenience of those who would like to read the
technical reference material. To access the applicable IRC sections,
Treasury Regulations, or other official tax guidance, visit the
Tax
Code, Regulations, and Official Guidance page. To access any Tax
Court case opinions issued after September 24, 1995, visit the
Opinions Search page of the United States Tax Court. |
