Question

In: Accounting

7. Indicate whether the following are like-kind property for purposes of deferring tax under Section 1031?...

7. Indicate whether the following are like-kind property for purposes of deferring tax under Section 1031?

(“yes” = like-kind property, “no” = not like-kind property)

___. Multi-family building in New Mexico for multi-family building in London.
___. 99 year ground lease on land for US shopping center.

___. Residential apartment building for a fleet of trucks.

___. Fixtures that can be used in real estate for U.S. vacant land.
___. Apartment building in New York for vacant land in California.

___. Single family home in Colorado held by a developer for sale for vacant land in Texas.

Expert Solution

Indicate whether the following are like-kind property for purposes of deferring tax under Section 1031?

1). Multi-family building in New Mexico for multi-family building in London.

Ans No (Not like Kind Property) This won't be qualified as like kind property because as per IRS (Internal Revenue Service) tax code both the relinquished property and replacement property should be located in the United States of America. In the given scenario on property is located in New Mexico, USA and other is Located in London, England. Hence will not qualify for Like kind property.

2). 99 year ground lease on land for US shopping center.

Ans: Yes Like kind property

As per IRS, a leasehold interest in real property where unexpired lease term is of atleast 30 years is a qualified asset and can be for other qualifying assets such as office building, shopping center etc.

3).Residential apartment building for a fleet of trucks.

Ans. No (Not like Kind Property)

Since the Residential apartment building and fleet of Trucks belongs to different product class, they will not qualify as Like Kind Property.

4) Fixtures that can be used in real estate for U.S. vacant land.

Ans: Yes Like kind Property

Fixture is a part and parcel of real property.Any real property held for productive use in a trade or business or for investment, whether improved or unimproved, is considered like-kind real property Hence it will qualify as like kind property.

5). Apartment building in New York for vacant land in California.

Ans: Yes Like Kind Property

Since Both the property are real property and also located in the United States of America. They would qualify for Like kind property if held for investment or business purpose.

6) .Single family home in Colorado held by a developer for sale for vacant land in Texas.

Ans: Yes Like Kind Property

Single Family home held by developer is a real property which is a eligibe property and hence can be exchange for vacant land in Texas.

ekkarill92 answered 1 year ago

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