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Tax Reform Update: Generally, only real property now qualifies under the like-kind exchange rules. See the instructions for exceptions.

Certain exchanges of property are not taxable. This means any gain from the exchange is not recognized, and any loss cannot be deducted.

For information on like-kind exchanges, please see IRS Publication 544 Sales and Other Dispositions of Assets. Additional information is available on the IRS Like-Kind Exchanges Under IRC Code Section 1031 website.

If the asset was disposed of in a like-kind exchange, you would check Check here if reporting on Form 4684, 8824, or Schedule D Home Sale worksheet on the Sale of Business Property form (and complete the other required information on the form). In the Q&A, you would click Modify on the screen titled Asset Sale - Gain or Loss. You also need to complete the information for Form 4684 Casualties and Thefts, Form 8824 Like-Kind Exchanges, or Schedule D Capital Gains and Losses as the information does not transfer to that form from the Sale of Business Property form.

If you are reporting this on Form 8824:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand, then click Like-Kind Exchanges (Section 1031) & Conflict-of-Interest Sales (Section 1043).
  3. Click + Add Form 8824 to create a new copy of the form or click Edit to review a form already created.
  4. Select Like-Kind Exchange, then continue with the interview process to enter all of the appropriate information.

The amount on Line 25 of Form 8824 is the basis you would use to enter the acquired asset for depreciation purposes.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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