tax-free exchange

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Tax-Free Exchange

Under Section 1031 of the Internal Revenue Code, the exchange of two assets of like kind, even if of different quality, that are used for a business or for investment purposes. The goods exchanged are not assessed capital gains taxes. More precisely, capital gains taxes are deferred until an asset is resold with no intention of reinvestment. Tax-free exchanges also apply if one sells an asset with the intention to use the proceeds to buy a similar asset. For example, if a farmer sells his farm and uses the money to buy another farm, capital gains taxes are likely deferred on the money he made on the sale of the first farm. The same would be true if the he traded farm for farm.

tax-free exchange

An exchange of assets between taxpayers in which any gain or loss is not recognized in the period during which the exchange takes place. Rather, taxpayers are required to adjust the basis of assets exchanged.

tax-free exchange

A common term for a tax-deferred exchange. It is not tax free; one pays the taxes at a later date. See 1031 exchange.

References in periodicals archive ?
14 /PRNewswire/ -- In a move that will further its national expansion plans, Bayview Financial Exchange Services, LLC, also known as Bayview 1031, has hired Alan Finney as the National Business Development Consultant (BDC) to handle the growing demand for 1031 exchanges across the country.
For the first time, today's real estate investors and professionals will have immediate access to all the resources they need for successful, efficient 1031 exchanges in a single dynamic website.
There are two major reasons for this great surge in these types of investments: the first is that the IRS approved TICs as suitable replacement properties for 1031 exchanges in 2002.
Melanie brings with her years of experience structuring and completing 1031 exchanges.
The 1031 Exchange Group assists clients in the deferral of capital gains taxes through the planning of and execution of 1031 exchanges.
All States extensive tax-saving programs for real estate and personal property include forward 1031 exchanges, safe harbor reverse exchanges under Revenue Procedure 2000-37, non-safe harbor reverse exchanges and construction exchanges.
Bayview Financial Exchange Services, LLC, also known as Bayview 1031, will provide Prudential Florida WCI Realty with the tools necessary to best serve its customers in all business transactions relating to 1031 exchanges.
Eggleston adds that tobacco quota owners could shield as much as 25% of their buyout payments from taxation using 1031 Exchanges.
LOS ANGELES -- PropPoint, a Los Angeles-based firm specializing in Tenant-in-Common (TIC) 1031 exchanges, today announced that Scott Bjornson has joined the company as vice president to lead the growing firm's expansion into Florida and the southeastern United States.
Whether vacation, or "second", homes qualify for 1031 exchanges is a hotly contested issue within the 1031 exchange community.
Kraus has over 20 years of experience in the real estate industry, including handling over $2 billion worth of 1031 exchanges.