Get Revenue Procedure 2000 - 37 - Like-kind ... - Uncle Fed's Tax *Board

Section 1031(a)(1) provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if the property is exchanged solely for property of a like kind that is to be held either for productive use in a trade or business or for investment.

The taxpayer and the related party must hold the properties that each received as part of the 1031 Exchange transaction for a minimum of two (2) years. The two (2) year holding period starts running on the date of the transfer or conveyance of the last property involved in the 1031 Exchange related party transaction.

2000-37 provides that the Internal Revenue Service will not challenge the qualification of property held in a QEAA “as either 'replacement property' or 'relinquished property' (as defined in § 1.1031(k)-1(a)) for purposes of § 1031 and the regulations thereunder, or the treatment of the exchange accommodation ...

In a standard 1031 exchange, you need to reinvest 100% of the proceeds from the sale of your relinquished property to defer all capital gains taxes.

IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.

A revenue procedure is an official statement of a procedure published in the Bulletin that either affects the rights or duties of taxpayers or other members of the public under the Internal Revenue Code and related statutes, treaties, and regulations or, although not necessarily affecting the rights and duties of the ...

72-601 concludes (1) that a transfer of a life estate in one parcel of real property in return for a remainder interest in another does not qualify as a like kind exchange under section 1031(a) of the Code because the remainder interest received is an advance rental in consideration for the transfer of a right to use ...

For example, if a taxpayer started an exchange in November of 2021, and completed the exchange in February of 2022, the exchange will be reported on their 2021 tax return. If the exchange will not be completed by the deadline for filing, the taxpayer may need to file for an extension using Form 4868.