6. Which of the following qualify as like-kind exchanges under S 1031? a. improved for...


6. Which of the following qualify as like-kind exchanges under S 1031?

a. improved for unimproved real estate.

b. vending machine (used in business) for inventory.

c. rental house or personal residence.

d. business equipment for securities.

e. warehouse fr office building (both used for business).

f. truck for the computer (both used for business).

g. rental house for land (both held for investment).

h. ten shares of stock in Blue Corporation for 10 shares of stock in Red Corporation.

i. office furniture for office equipment (both used for business).

j. unimproved land in Jackson, Mississippi, for unimproved land in Toledo, Spain.

k. general partnership interest for a general partnership interest.

Like-kind exchanges:

Typically when property is sold it requires a taxpayer to recognize a gain. Under IRS section 1031, a like-kind exchange allows the taxpayer to delay the recognition of gain if the proceeds from the sale are used to purchase a similar asset. The gain is deferred because the taxpayer's basis in the originally sold asset is transferred to the newly purchased asset, preserving the gain until the newly purchased asset is sold. There are rules governing which types of property qualify as like-kind.

Answer and Explanation: 1

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It is important to remember that the IRS allows a lot more leniency for real property used in business to be considered a like-kind exchange. Personal...

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Income Tax: Tax Liability & Deductions


Chapter 3 / Lesson 5

Learn what income tax liability is. Find out what taxable and adjusted gross income are, discover how to calculate tax liability, and examine common deductions.

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