What is Reverse like-kind exchange?
In short
In a reverse like-kind exchange, the replacement property is acquired before the old property is sold. An exchange accommodation titleholder holds title to one of the properties until the exchange is completed.
Key takeaways
- Under the safe harbor, the property to be given up must be identified within 45 days.
- The exchange must be completed within 180 days.
- The taxpayer can't hold both properties directly at the same time.
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
A taxpayer sells equipment with an adjusted basis of $60,000 (original cost $100,000, accumulated depreciation $40,000) for $120,000, receiving payments over four years. What is recognized in the year of sale beyond any installment gain on the first payment?