Do Your Business Assets Qualify for a Like-Kind Exchange?


When businesses buy and sell assets like real property, equipment, or even intangibles like intellectual property, potential tax liabilities are always an important consideration. While earnings generated from the sale of a business property are generally assessed at the time of the sale, there are several tools available for businesses hoping to defer their tax obligation.

One of the most common is a “like-kind exchange” under Section 1031 of the Internal Revenue Code. In basic terms, a like-kind exchange allows businesses to postpone paying tax on the gain if they reinvest the proceeds in similar property.

Of course, there are a number of requirements that must be satisfied in order to qualify as a like-kind exchange. This post addresses one of the most important questions—are your assets considered like-kind?

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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