PURPOSE: Defer payment of capital gains taxes.
PROPERTY THAT CAN BE EXCHANGED: Real property or personal property such as aircraft, vessels, equipment or art.
LIKE KIND REQUIREMENT: Properties must be held for investment or in connection with a trade or business but do not have to be similar use (exchange raw land for an apartment building).
EXCHANGE TRANSACTION: "Transfer" of relinquished property and "acquisition" of the replacement property.
SAME TAXPAYER REQUIREMENT: The Taxpayer must acquire title to the replacement property in the same manner as title was held in the relinquished property. There are some exceptions to this rule as entities that are disregarded for tax purposes.
DEADLINES: Two deadlines, both of which begin in the date of transfer of the first relinquished property:
IDENTIFICATION RULES: Replacement property must be unambiguously described, made in writing, and signed by Taxpayer. The two most common identification rules are:
FULLY DEFERRED EXCHANGE: Many criteria must be met in order to have a fully deferred exchange. Generally:
Northern California Sales Manager