Tax Facts

8666 / What is a taxpayer’s basis in property received in a like-kind exchange?

In a transaction qualifying for nonrecognition treatment, the property received takes a carryover or transferred basis from the property given up. In this manner, the unrecognized gain or loss on the property disposed of is deferred by becoming the basis of the replacement property to be recognized later when the replacement property is disposed of in a taxable transaction.1

1. IRC § 1031(d).

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