Form 8824 Like-Kind Exchanges is used by taxpayers to report an exchange of real property for real property of "like kind" so that they can calculate and report any taxable gain for the applicable tax year.
Who Should File a Form 8824?
S Corporations, C Corporations, Partnerships (general or limited), LLC's, Trusts, Individuals and any taxpaying entity that may have an exchange of business or investment property under the Internal Revenue Code Section 1031.
What kinds of properties qualify for a Like-Kind Exchange?
The property that is sold and bought must meet certain requirements laid out by the IRS. Those requirements are:
The property must be held for use in a trade or business or for an investment
Are there any Exclusions
There are a few kinds of property that do not qualify to be like-kind exchange. Those are:
- Interest in a trust as a beneficiary or Certificates of trust
- Ownership interest in a partnership business
- Business inventory or stock in trade
- Stocks, bonds, or notes
- Other types of securities or debt
Are their time limits to complete the Like-Kind Exchange?
Yes, there are time limits that cannot be extended for "any circumstance or hardship except in the case of presidentially declared disasters," according to irs.gov.
You have 45 days from the date of sale to properly identify the replacement property(s). Identification must be in writing and signed by both parties and delivered to a person involved in the exchange such as the seller of the replacement property or the qualified intermediary. A notice to your attorney, accountant, or real estate agent or other similar person acting as your agent will not be sufficient.
The replacement property must be received and the exchange must be complete within 180 days from the date of sale of exchanged property or the due date (including any extensions) of the income tax return for the tax year in which the property was sold, whichever is earlier.
What do I need to complete Form 8824?
According to irs.gov you will need:
- Descriptions of the properties exchanged
- Dates that properties were identified and transferred
- Any relationship between the parties to the exchange
- Value of the like-kind and other property received
- Gain or loss on sale of other (non-like-kind) property given up
- Cash received or paid; liabilities relieved or assumed
- Adjusted basis of like-kind property given up; realized gain
Program Entry
- Federal
- Income
- Less Common Income
- Like-Kind Exchanges - Form 8824