Center for Agricultural Law and Taxation

IRS Fact Sheet on Like-Kind Exchanges
- by Roger McEowen

The IRS has published a summary of the rules for like-kind exchanges.  In the summary, IRS reminds taxpayers of the following:

1. I.R.C. Sec. 1031 allows for tax-deferral, not tax forgiveness (unless, of course, the taxpayer dies and the heirs are able to utilize the step-up basis rule for inherited property).
2. Basis figures must be computed properly and basis information must be retained.
3. Upon sale of the replacement property, tax deferrment is over and tax will ordinarily be due.

 

The summary is IRS Fact Sheet 2008-18.  The complete IRS Fact Sheet is available here.