Discussion:Basis of property in like-kind exchange
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Discussion Forum Index --> Tax Questions --> Basis of property in like-kind exchange
| 4 January 2007 | |
| The following transaction initially qualified for a §1031 Like-Kind Exchange and subsequent gain deferral. Property C was sold outside of the rules for §1031 and gain must be calculated.
3/1/2003: Property A purchased for $100,000 in 2000 3/1/2005: Property A relinquished for properties B and C; Property A sales price: $140,000
Property B purchase price: $ 85,000
Property C purchase price: $ 55,000
9/1/2006: Property C sold for $95,000 What is the basis of Property C for calculating the gain? I cannot find anything that states if it is $55,000 or that it should proportional to property A like so: $55,000 / $140,000 = 39.29% 39% * $100,000 = $39,290
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| 4 January 2007 | |
| Hi without confirming I would have prorated A's carryover cost basis as you did between B and C. It definitely is not 55K. bye | |
| 4 January 2007 | |
| If Property C is nonqualifying property, then the FMV of that property should be treated as boot on the original exchange, and the basis would be $55,000. | |
| 4 January 2007 | |
| The OP stated that the initial exchange qualified under Sec 1031. Therefore Property C must have been qualifying property.
The basis must be allocated between the parcels. See Rev. Rul. 68-36, 1968-1 CB 357. | |
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