1031 Exchange Flashcards
1
Q
1031 Exchange
A
According to Sec. 1031, any gain realized from a qualified like-kind exchange can be tax-deferred and recognized only when the replacement property is ultimately sold. An exception to recognition of gain is when a boot is involved. A boot is a receipt of unlike property, which also now includes personal property and is taxed to the extent of the smaller of (1) the realized gain or (2) the actual boot received.
Realized gain = FMV of new property - Basis of property given up + (Boot received (mortgage debt relieved) - Boot paid (mortgage Debt Assumed)).
