For the following exchanges, indicate which qualify as like-kind property for purposes of section 1031 (tax-free...

For the following exchanges, indicate which qualify as like-kind property for purposes of section 1031 (tax-free exchanges):

a. Land held for investment for land to be used as the site for an apartment building

b. Rental condo in Las Vegas for a condo in Ventura to be used as a personal vacation home

c. Stock in American Airlines for stock in Southwest Airlines

d. Factory building in Detroit for an office building in New York

e. Used truck used in a business for a new truck to be used in the business

Expert Solution

Answer:

a- qualify

b- qualify

c- Not qualify

d - Not Qualify

e- Not qualify

Following are examples of qualifying properties that could be exchanged:
• Raw land or farmland for improved real estate
• Oil & gas royalties for a ranch
• Fee simple interest in real estate for a 30-year leasehold or a Tenant-in-Common interest in real estate
• Residential, Commercial, Industrial or Retail rental properties for any other real estate
• Rental ski condo for a three-unit apartment building
• Mitigation credits for restoring wetlands for other mitigation credits.

Under IRC §1031, the following properties do not qualify

• Stock in trade or other property held primarily for sale (i.e. property held by a developer, “flipper” or other dealer)
• Securities or other evidences of indebtedness or interest
• Stocks, bonds or notes
• Certificates of trust or beneficial interests
• Interests in a partnership
• Choses in action (rights to receive money or other property by judicial proceeding)
• Foreign real property for U.S. real property
• Goodwill of one business for goodwill of another business

ekkarill92 answered 1 year ago

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