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Article: Tax-free trades: simple concept, sticky rules. (Internal Revenue Code's Section 1031)
- Article from:
- The National Public Accountant
- Article date:
- June 1, 1994
- Author:
CopyrightCOPYRIGHT 1994 National Society of Public Accountants. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Considerable investor interest has been shown recently in deferred "like-kind" exchanges of real estate in order to minimize tax consequences. Generally, if property currently being used in a trade or business or held for investment is sold at a gain, the gain is realized and recognized at the time of sale. Under Section 1031 of the Internal Revenue Code (IRC), however, gain may be deferred if "like-kind" property is acquired in an exchange as replacement for the property relinquished.
Those planning to take advantage of such a reinvestment strategy should be forewarned that strict adherence to the rules is demanded. The risk versus rewards should be carefully ...