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for Internal Revenue Code:Sec. 1031. Exchange of property held for productive use or investment
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==Location in Internal Revenue Code==
<pre>

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter O - Gain or Loss on Disposition of Property
         PART III - COMMON NONTAXABLE EXCHANGES
       
</pre>
==Statute==
<pre>
    Sec. 1031. Exchange of property held for productive use or
        investment
 
    (a) Nonrecognition of gain or loss from exchanges solely in kind
      (1) In general
        No gain or loss shall be recognized on the exchange of property
      held for productive use in a trade or business or for investment
      if such property is exchanged solely for property of like kind
      which is to be held either for productive use in a trade or
      business or for investment.
      (2) Exception
        This subsection shall not apply to any exchange of -
          (A) stock in trade or other property held primarily for sale,
          (B) stocks, bonds, or notes,
          (C) other securities or evidences of indebtedness or
        interest,
          (D) interests in a partnership,
          (E) certificates of trust or beneficial interests, or
          (F) choses in action.
      For purposes of this section, an interest in a partnership which
      has in effect a valid election under section 761(a) to be
      excluded from the application of all of subchapter K shall be
      treated as an interest in each of the assets of such partnership
      and not as an interest in a partnership.
      (3) Requirement that property be identified and that exchange be
          completed not more than 180 days after transfer of exchanged
          property
        For purposes of this subsection, any property received by the
      taxpayer shall be treated as property which is not like-kind
      property if -
          (A) such property is not identified as property to be
        received in the exchange on or before the day which is 45 days
        after the date on which the taxpayer transfers the property
        relinquished in the exchange, or
          (B) such property is received after the earlier of -
            (i) the day which is 180 days after the date on which the
          taxpayer transfers the property relinquished in the exchange,
          or
            (ii) the due date (determined with regard to extension) for
          the transferor's return of the tax imposed by this chapter
          for the taxable year in which the transfer of the
          relinquished property occurs.
    (b) Gain from exchanges not solely in kind
      If an exchange would be within the provisions of subsection (a),
    of section 1035(a), of section 1036(a), or of section 1037(a), if
    it were not for the fact that the property received in exchange
    consists not only of property permitted by such provisions to be
    received without the recognition of gain, but also of other
    property or money, then the gain, if any, to the recipient shall be
    recognized, but in an amount not in excess of the sum of such money
    and the fair market value of such other property.
    (c) Loss from exchanges not solely in kind
      If an exchange would be within the provisions of subsection (a),
    of section 1035(a), of section 1036(a), or of section 1037(a), if
    it were not for the fact that the property received in exchange
    consists not only of property permitted by such provisions to be
    received without the recognition of gain or loss, but also of other
    property or money, then no loss from the exchange shall be
    recognized.
    (d) Basis
      If property was acquired on an exchange described in this
    section, section 1035(a), section 1036(a), or section 1037(a), then
    the basis shall be the same as that of the property exchanged,
    decreased in the amount of any money received by the taxpayer and
    increased in the amount of gain or decreased in the amount of loss
    to the taxpayer that was recognized on such exchange.  If the
    property so acquired consisted in part of the type of property
    permitted by this section, section 1035(a), section 1036(a), or
    section 1037(a), to be received without the recognition of gain or
    loss, and in part of other property, the basis provided in this
    subsection shall be allocated between the properties (other than
    money) received, and for the purpose of the allocation there shall
    be assigned to such other property an amount equivalent to its fair
    market value at the date of the exchange.  For purposes of this
    section, section 1035(a), and section 1036(a), where as part of the
    consideration to the taxpayer another party to the exchange assumed
    (as determined under section 357(d)) a liability of the taxpayer,
    such assumption shall be considered as money received by the
    taxpayer on the exchange.
    (e) Exchanges of livestock of different sexes
      For purposes of this section, livestock of different sexes are
    not property of a like kind.
    (f) Special rules for exchanges between related persons
      (1) In general
        If -
          (A) a taxpayer exchanges property with a related person,
          (B) there is nonrecognition of gain or loss to the taxpayer
        under this section with respect to the exchange of such
        property (determined without regard to this subsection), and
          (C) before the date 2 years after the date of the last
        transfer which was part of such exchange -
            (i) the related person disposes of such property, or
            (ii) the taxpayer disposes of the property received in the
          exchange from the related person which was of like kind to
          the property transferred by the taxpayer,
      there shall be no nonrecognition of gain or loss under this
      section to the taxpayer with respect to such exchange; except
      that any gain or loss recognized by the taxpayer by reason of
      this subsection shall be taken into account as of the date on
      which the disposition referred to in subparagraph (C) occurs.
      (2) Certain dispositions not taken into account
        For purposes of paragraph (1)(C), there shall not be taken into
      account any disposition -
          (A) after the earlier of the death of the taxpayer or the
        death of the related person,
          (B) in a compulsory or involuntary conversion (within the
        meaning of section 1033) if the exchange occurred before the
        threat or imminence of such conversion, or
          (C) with respect to which it is established to the
        satisfaction of the Secretary that neither the exchange nor
        such disposition had as one of its principal purposes the
        avoidance of Federal income tax.
      (3) Related person
        For purposes of this subsection, the term ''related person''
      means any person bearing a relationship to the taxpayer described
      in section 267(b) or 707(b)(1).
      (4) Treatment of certain transactions
        This section shall not apply to any exchange which is part of a
      transaction (or series of transactions) structured to avoid the
      purposes of this subsection.
    (g) Special rule where substantial diminution of risk
      (1) In general
        If paragraph (2) applies to any property for any period, the
      running of the period set forth in subsection (f)(1)(C) with
      respect to such property shall be suspended during such period.
      (2) Property to which subsection applies
        This paragraph shall apply to any property for any period
      during which the holder's risk of loss with respect to the
      property is substantially diminished by -
          (A) the holding of a put with respect to such property,
          (B) the holding by another person of a right to acquire such
        property, or
          (C) a short sale or any other transaction.
    (h) Special rules for foreign real and personal property
      For purposes of this section -
      (1) Real property
        Real property located in the United States and real property
      located outside the United States are not property of a like
      kind.
      (2) Personal property
        (A) In general
          Personal property used predominantly within the United States
        and personal property used predominantly outside the United
        States are not property of a like kind.
        (B) Predominant use
          Except as provided in subparagraphs (FOOTNOTE 1) (C) and (D),
        the predominant use of any property shall be determined based
        on - (FOOTNOTE 1) So in original. 
            (i) in the case of the property relinquished in the
          exchange, the 2-year period ending on the date of such
          relinquishment, and
            (ii) in the case of the property acquired in the exchange,
          the 2-year period beginning on the date of such acquisition.
        (C) Property held for less than 2 years
          Except in the case of an exchange which is part of a
        transaction (or series of transactions) structured to avoid the
        purposes of this subsection -
            (i) only the periods the property was held by the person
          relinquishing the property (or any related person) shall be
          taken into account under subparagraph (B)(i), and
            (ii) only the periods the property was held by the person
          acquiring the property (or any related person) shall be taken
          into account under subparagraph (B)(ii).
        (D) Special rule for certain property
          Property described in any subparagraph of section 168(g)(4)
        shall be treated as used predominantly in the United States.
 
</pre>
==Sources==
<pre>
    (Aug. 16, 1954, ch. 736, 68A Stat. 302; Pub. L. 85-866, title I,
    Sec. 44, Sept. 2, 1958, 72 Stat. 1641; Pub. L. 86-346, title II,
    Sec. 201(c)-(e), Sept. 22, 1959, 73 Stat. 624; Pub. L. 91-172,
    title II, Sec. 212(c)(1), Dec. 30, 1969, 83 Stat. 571; Pub. L.
    98-369, div.  A, title I, Sec. 77(a), July 18, 1984, 98 Stat. 595;
    Pub. L. 99-514, title XVIII, Sec. 1805(d), Oct. 22, 1986, 100 Stat.
    2810; Pub. L. 101-239, title VII, Sec. 7601(a), Dec. 19, 1989, 103
    Stat. 2370; Pub. L. 101-508, title XI, Sec. 11701(h), 11703(d)(1),
    Nov. 5, 1990, 104 Stat. 1388-508, 1388-517; Pub. L. 105-34, title
    X, Sec. 1052(a), Aug. 5, 1997, 111 Stat. 940; Pub. L. 106-36, title
    III, Sec. 3001(c)(2), June 25, 1999, 113 Stat. 183.)
 
</pre>
==Miscellaneous==
<pre>
                                 AMENDMENTS
      1999 - Subsec. (d). Pub. L. 106-36, in last sentence, substituted
    ''assumed (as determined under section 357(d)) a liability of the
    taxpayer'' for ''assumed a liability of the taxpayer or acquired
    from the taxpayer property subject to a liability'' and struck out
    ''or acquisition (in the amount of the liability)'' after ''such
    assumption''.
      1997 - Subsec. (h). Pub. L. 105-34 amended heading and text of
    subsec. (h) generally.  Prior to amendment, text read as follows:
    ''For purposes of this section, real property located in the United
    States and real property located outside the United States are not
    property of a like kind.''
      1990 - Subsec. (a)(2). Pub. L. 101-508, Sec. 11703(d)(1),
    inserted at end ''For purposes of this section, an interest in a
    partnership which has in effect a valid election under section
    761(a) to be excluded from the application of all of subchapter K
    shall be treated as an interest in each of the assets of such
    partnership and not as an interest in a partnership.''
      Subsec. (f)(3). Pub. L. 101-508, Sec. 11701(h), substituted
    ''section 267(b) or 707(b)(1)'' for ''section 267(b)''.
      1989 - Subsecs. (f) to (h). Pub. L. 101-239 added subsecs. (f) to
    (h).
      1986 - Subsec. (a)(3)(A). Pub. L. 99-514 substituted ''on or
    before the day'' for ''before the day''.
      1984 - Subsec. (a). Pub. L. 98-369, Sec. 77(a), in amending
    subsec. generally, designated existing provisions as par. (1),
    substituted ''No gain or loss shall be recognized on the exchange
    of property held for productive use in a trade or business or for
    investment if such property is exchanged solely for property of
    like kind which is to be held either for productive use in a trade
    or business or for investment'' for ''No gain or loss shall be
    recognized if property held for productive use in trade or business
    or for investment (not including stock in trade or other property
    held primarily for sale, nor stocks, bonds, notes, choses in
    action, certificates of trust or beneficial interest, or other
    securities or evidences of indebtedness or interest) is exchanged
    solely for property of a like kind to be held either for productive
    use in trade or business or for investment'', and added pars. (2)
    and (3).
      1969 - Subsec. (e). Pub. L. 91-172 added subsec. (e).
      1959 - Subsecs. (b) to (d). Pub. L. 86-346 inserted references to
    section 1037(a) in subsecs. (b) and (c) and in first two sentences
    of subsec. (d).
      1958 - Subsec. (d). Pub. L. 85-866 inserted in first sentence a
    comma between ''exchanged'' and ''decreased'' and ''or decreased in
    the amount of loss'', and substituted in second sentence
    ''subsection'' for ''paragraph''.
                      EFFECTIVE DATE OF 1999 AMENDMENT
      Amendment by Pub. L. 106-36 applicable to transfers after Oct.
    18, 1998, see section 3001(e) of Pub. L. 106-36, set out as a note
    under section 351 of this title.
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 1052(b) of Pub. L. 105-34 provided that:
      ''(1) In general. - The amendment made by this section (amending
    this section) shall apply to transfers after June 8, 1997, in
    taxable years ending after such date.
      ''(2) Binding contracts. - The amendment made by this section
    shall not apply to any transfer pursuant to a written binding
    contract in effect on June 8, 1997, and at all times thereafter
    before the disposition of property.  A contract shall not fail to
    meet the requirements of the preceding sentence solely because -
        ''(A) it provides for a sale in lieu of an exchange, or
        ''(B) the property to be acquired as replacement property was
      not identified under such contract before June 9, 1997.''
                      EFFECTIVE DATE OF 1990 AMENDMENT
      Section 11701(h) of Pub. L. 101-508 provided that the amendment
    made by that section is effective with respect to transfers after
    Aug. 3, 1990.
      Section 11703(d)(2) of Pub. L. 101-508 provided that: ''The
    amendment made by paragraph (1) (amending this section) shall apply
    to transfers after July 18, 1984.''
                      EFFECTIVE DATE OF 1989 AMENDMENT
      Section 7601(b) of Pub. L. 101-239 provided that:
      ''(1) In general. - Except as provided in paragraph (2), the
    amendments made by this section (amending this section) shall apply
    to transfers after July 10, 1989, in taxable years ending after
    such date.
      ''(2) Binding contract. - The amendments made by this section
    shall not apply to any transfer pursuant to a written binding
    contract in effect on July 10, 1989, and at all times thereafter
    before the transfer.''
                      EFFECTIVE DATE OF 1986 AMENDMENT
      Amendment by Pub. L. 99-514 effective, except as otherwise
    provided, as if included in the provisions of the Tax Reform Act of
    1984, Pub. L. 98-369, div.  A, to which such amendment relates, see
    section 1881 of Pub. L. 99-514, set out as a note under section 48
    of this title.
                      EFFECTIVE DATE OF 1984 AMENDMENT
      Section 77(b) of Pub. L. 98-369, as amended by Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
      ''(1) In general. - Except as otherwise provided in this
    subsection, the amendment made by subsection (a) (amending this
    section) shall apply to transfers made after the date of the
    enactment of this Act (July 18, 1984) in taxable years ending after
    such date.
      ''(2) Binding contract exception for transfer of partnership
    interests. - Paragraph (2)(D) of section 1031(a) of the Internal
    Revenue Code of 1986 (formerly I.R.C. 1954) (as amended by
    subsection (a)) shall not apply in the case of any exchange
    pursuant to a binding contract in effect on March 1, 1984, and at
    all times thereafter before the exchange.
      ''(3) Requirement that property be identified within 45 days and
    that exchange be completed within 180 days. - Paragraph (3) of
    section 1031(a) of the Internal Revenue Code of 1986 (as amended by
    subsection (a)) shall apply -
        ''(A) to transfers after the date of the enactment of this Act
      (July 18, 1984), and
        ''(B) to transfers on or before such date of enactment if the
      property to be received in the exchange is not received before
      January 1, 1987.
    In the case of any transfer on or before the date of the enactment
    of this Act which the taxpayer treated as part of a like-kind
    exchange, the period for assessing any deficiency of tax
    attributable to the amendment made by subsection (a) (amending this
    section) shall not expire before January 1, 1988.
      ''(4) Special rule where property identified in binding contract.
    - If the property to be received in the exchange is identified in a
    binding contract in effect on June 13, 1984, and at all times
    thereafter before the transfer, paragraph (3) shall be applied -
        ''(A) by substituting 'January 1, 1989' for 'January 1, 1987',
      and
        ''(B) by substituting 'January 1, 1990' for 'January 1, 1988'.
      ''(5) Special rule for like-kind exchange of partnership
    interests. - Paragraph (2)(D) of section 1031(a) of the Internal
    Revenue Code of 1986 (as amended by subsection (a)) shall not apply
    to any exchange of an interest as general partner pursuant to a
    plan of reorganization of ownership interest under a contract which
    took effect on March 29, 1984, and which was executed on or before
    March 31, 1984, but only if all the exchanges contemplated by the
    reorganization plan are completed on or before December 31, 1984.''
                      EFFECTIVE DATE OF 1969 AMENDMENT
      Section 212(c)(2) of Pub. L. 91-172, as amended by Pub. L.
    99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
    amendment made by paragraph (1) (amending this section) shall apply
    to taxable years to which the Internal Revenue Code of 1986
    (formerly I.R.C. 1954) applies.''
                      EFFECTIVE DATE OF 1959 AMENDMENT
      Amendment by Pub. L. 86-346 effective for taxable years ending
    after Sept. 22, 1959, see section 203 of Pub. L. 86-346, set out as
    an Effective Date note under section 1037 of this title.
                      EFFECTIVE DATE OF 1958 AMENDMENT
      Amendment by Pub. L. 85-866 applicable to taxable years beginning
    after Dec. 31, 1953, and ending after Aug. 16, 1954, see section
    1(c)(1) of Pub. L. 85-866, set out as a note under section 165 of
    this title.
             PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
      For provisions directing that if any amendments made by subtitle
    A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title
    XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to
    any plan, such plan amendment shall not be required to be made
    before the first plan year beginning on or after Jan. 1, 1989, see
    section 1140 of Pub. L. 99-514, as amended, set out as a note under
    section 401 of this title.
 
</pre>
==References==
<pre>
                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 83, 197, 424, 453, 454,
    704, 857, 1035, 1036, 1037, 1060, 1245, 1250, 2032A, 2057 of this
    title.
 

</pre>
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