| 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.
Note: The above information references an Internal Revenue
Code (IRC) section. A link to the Internal Revenue Code is
included for the convenience of those who would like to read the
technical reference material. To access the applicable Internal
Revenue Code sections visit
U.S. code search page. Enter “26” in the “Title” box and
then the appropriate IRC section in the “Section” box and click
on the search button.
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. |