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 ?
OTC BB:HNLY) announced Tuesday that it has agreed to acquire Atlanta based systems integrator Tiny Mind Polymedia in a tax free exchange of stock and an agreement by Henley to provide working capital for growth and expansion.
The tax free exchange agreement, for 250,000 shares of AM-PAC restricted stock, includes a 7,000 sq.
The gain resulting from the sale of the property will be deferred with a tax free exchange.
The gain resulting from the sale will be deferred with a tax free exchange.
Under the terms of the agreement, UPC will acquire all of the 13,569 outstanding shares of SBT for approximately $21 million in UPC common stock in a tax free exchange.
The Spectrum merger is being accounted for on a tax free exchange of stock basis under the "pooling of interests" accounting method.
In order to qualify as a tax free exchange, the Company will use the net proceeds from the sale of 15 Essex Road to acquire 103 Carnegie Center and the 3.
Under the terms of the agreement, the merger will be accounted for as a pooling-of-interests and structured as a tax free exchange, with each Hornbeck share being converted into .
The merger will be accounted for as a pooling-of-interests and will be structured as a tax free exchange of .
92 of a share of Webster common stock, in a tax free exchange, for each of their shares of Shelton Bancorp common stock.