like-kind exchange

Like-for-Like Sales

The comparison of a company's sales over a given period of time to the sales from a different period of time that resulted from the same or similar activities. For example, if a company has $3 million in sales in 2009 from its flagship store, this is compared to its sales from the same flagship store in 2008 and not to any of its satellite stores. Comparing like-for-like sales ignores the effects of expansion or other changes in activities that could distort comparisons from year to year.

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.

like-kind exchange

Under IRS regulations,property held for productive use in a trade or business or for investment that is exchanged solely for similar property.Any real estate (except your personal residence) is considered like-kind to any other real estate. Encountered in the context of a 1031 exchange, if you sell a piece of real estate, and then buy another piece within certain strict time limits and following very specific rules,then you will not have to pay income taxes on the first sale. Taxes will be paid when you sell the second property,unless you do another 1031 exchange.In that case,tax payment will be delayed again.See also 1031 exchange.

Example: In real estate, all real estate except one's personal residence(s) is considered “like kind” to all other real estate. City property is “like kind” to farm property; unimproved real estate is “like kind” to improved real estate. On the other hand, shares in a REIT are not considered real estate for the purposes of a like-kind exchange. In addition, a long-term lease of less than 30 years is not considered real estate, and a life estate expected to last less than 30 years is not considered real estate, for purposes of these rules. (For more information, see Publication 544, “Sales and Other Dispositions of Assets,” available at the IRS Web site, www.irs.gov.)

Like-Kind Exchange

An exchange of property held for productive use in a trade or business or for investment (except inventory and stocks and bonds) for property of the same type. Unless different property is received (called boot), the exchange is nontaxable in the current year. Any gain or loss is not recognized until the property received in the exchange is sold or disposed of. Like-kind exchanges are reported on Form 8824.
References in periodicals archive ?
In a letter to congressional tax-writers in March, The Roundtable and coalition partners asserted, "There is strong economic rationale for the like-kind exchange provision's nearly 100-year existence in the Code.
Form FTB 3840 must be filed in the year in which the like-kind exchange is completed and each subsequent year that the gain or loss is deferred, regardless of whether the seller/exchanger has any other California filing requirement.
The like-kind exchange rules may allow taxpayers to defer gain (or loss) realized on the exchange of property.
Like-kind exchange treatment not only defers the gain to periods of higher tax rates, but it may also reduce future depreciation deductions at those higher rates.
Whether you engaged in a like-kind exchange in that situation depends on an analysis of each asset involved in the exchange.
The Treasury has issued final regulations (Treasury Decision 9314) explaining how to depreciate modified accelerated cost recovery system (MACRS) property that has been acquired in a section 1031 like-kind exchange or through a section 1033 involuntary conversion when both the acquired and relinquished property are subject to MACRS in the hands of the acquiring taxpayer.
For the eco-wise investor who has done the land use and envisioning homework there are many exciting ways to produce positive outcomes, including the possibility of tax advantages such as those available through Federal and State programs and the 1031 Like-Kind Exchange as defined by section 1031 of the Internal Revenue Code, 26 U.
How long must a replacement property acquired in a like-kind exchange be held as an investment, rental, or business property before it can be converted to personal use, e.
When corporations are considering the disposition of business assets, one of the issues that frequently arises is whether a like-kind exchange under section 1031 of the Internal Revenue Code might be available to defer gain recognition.
Thus, virtually all real property is like-kind property and can usually qualify under the like-kind exchange rules.
This like-kind exchange is known as the one reliable, simple and legal way to avoid paying capital gains tax on real estate property.
NEW YORK -- Deutsche Bank today announced it has been appointed as Qualified Intermediary (QI) on Toyota Motor Credit Corporation's like-kind exchange program.