Skip to main content

Business Accounting CONCEPTS IN FED.TAX.,2020-W/ACCESS

Like-kind exchange refers to the deferred tax exchange which occurs when any assessee or taxpayer sold an asset and purchases another asset of a similar kind. Like-kind exchange does not create tax liability on the sale of the asset. To determine: The qualifications of a like-kind exchange. The following are certain criteria that qualify like-kind exchange as per section 1031 of the Internal revenue code: The asset that is being exchanged, i.e., sold and purchased should be of a similar kind (same category). The asset that is being exchanged should be used either for business purposes or held as an investment. Time restrictions should be kept in mind while doing this exchange, i.e., sold and purchase should be on specific time or requirement. The replacement asset must be of equal or greater value.

Like-kind exchange refers to the deferred tax exchange which occurs when any assessee or taxpayer sold an asset and purchases another asset of a similar kind. Like-kind exchange does not create tax liability on the sale of the asset. To determine: The qualifications of a like-kind exchange. The following are certain criteria that qualify like-kind exchange as per section 1031 of the Internal revenue code: The asset that is being exchanged, i.e., sold and purchased should be of a similar kind (same category). The asset that is being exchanged should be used either for business purposes or held as an investment. Time restrictions should be kept in mind while doing this exchange, i.e., sold and purchase should be on specific time or requirement. The replacement asset must be of equal or greater value.

Solution Summary: The author explains how like-kind exchange is a deferred tax exchange that occurs when an assessee or taxpayer sells an asset and purchases another asset of similar kind.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN: 9780357110362

Author: Murphy

Publisher: CENGAGE L

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 12, Problem 6DQ

Chapter 12, Problem 8DQ

Students have asked these similar questions

What qualifies as a like-kind exchange?

what is classified as a exchange transaction?

Describe Trade-Off theory.

Chapter 12 Solutions

CONCEPTS IN FED.TAX.,2020-W/ACCESS

Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 19P Ch. 12 - Prob. 20P Ch. 12 - Prob. 21P Ch. 12 - Prob. 22P Ch. 12 - Prob. 23P Ch. 12 - Prob. 24P Ch. 12 - Prob. 27P Ch. 12 - Prob. 30P Ch. 12 - Prob. 33P

Ch. 12 - Prob. 34P Ch. 12 - Prob. 35P

Knowledge Booster

Background pattern image

Similar questions

Recommended textbooks for you

International Financial Management
Finance
ISBN:9780357130698
Author:Madura
Publisher:Cengage
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning

Text book image

International Financial Management

Finance

ISBN:9780357130698

Author:Madura

Publisher:Cengage

Text book image

Intermediate Financial Management (MindTap Course...

Finance

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Cengage Learning

SEE MORE TEXTBOOKS