Tax Free Exchange financial definition of Tax Free Exchange. Tax Free Exchange finance term by the Free Online Dictionary.

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.

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References in periodicals archive

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1031 exchange
accommodating party
deferred exchange
delayed exchange
like-kind exchange
Trade-Free Exchanges

The acquisition was completed on an all cash basis to complete a tax free exchange.

Jim Coleman of Houlihan-Parnes Realtors, LLC has arranged for the ... by Real Estate Weekly

Montgomery intends to treat the transaction as a tax free exchange under Internal Revenue Code Section 1031 and reinvest substantially all of the sale proceeds.

Montgomery Enters Into Sale Agreement for OSH Shopping Center by PR Newswire

com), Harris & Harris Group has sold its interest in InSite in a tax free exchange for shares of Silknet.

Harris & Harris Group Sells Interest in InSite to Silknet and ... by Business Wire

Tax Court of Canada

tax credit

Tax Credit for the Elderly or Disabled

Tax Deductibility

Tax Deductible Interest