What is Related-party like-kind exchange?
In short
When a like-kind exchange is made with a related party, the deferred gain becomes taxable if either party disposes of the property it received within 2 years after the exchange.
Key takeaways
- Dispositions due to death or involuntary conversion are excepted.
- Dispositions shown not to have tax avoidance as a main purpose are also excepted.
- The gain is recognized in the year of the later disposition.
Where it's tested
TCP: Property Transactions: Advanced Planning — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
In a like-kind exchange between related parties, both parties must generally hold the exchanged property for at least: