Get 2022 Form 3840 California Like-kind Exchanges. 2022 Form 3840 California Like-kind Exchanges

Filing a 1031 exchange on your California state tax return is pretty straightforward. If you perform a like-kind exchange of California property, you must report that exchange on FTB Form 3840, provided you do both: Perform a 1031 exchange for property outside of California, and. Defer gain or loss under IRC 1031.

This involves filling out IRS Form 8824 and submitting it along with your federal income tax return. Each individual 1031 exchange you undertake within a tax year requires a separate Form 8824 to be accurately recorded.

How do you report Section 1031 Like-Kind Exchanges to the IRS? You must report an exchange to the IRS on Form 8824, Like-Kind Exchanges and file it with your tax return for the year in which the exchange occurred.

The property California investors sell and the replacement property they purchase must meet certain requirements to qualify for a 1031 Exchange. Both properties must be held for use in a trade or business or for investment. Both properties must be similar enough to qualify as “Like-Kind.”

Properties are of like-kind if they're of the same nature or character, even if they differ in grade or quality. Real properties generally are of like-kind, regardless of whether they're improved or unimproved. For example, an apartment building would generally be like-kind to another apartment building.

Any taxable gain recognized will be reported on IRS Form 4797 or Schedule D depending on the character of the relinquished property. Your taxable gain must be allocated between ordinary income depreciation recapture, unrecaptured Section 1250 taxable gain, Section 1231 taxable gain, and capital gain.

You must file FTB 3840 in the year of the exchange and each year after until the deferred gain or loss is recognized. We generally conform to IRC section 1031 as revised by the Tax Cuts and Jobs Act of 2017.