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Non-taxable exchanges

Non-taxable exchanges. Sale of a Personal Residence. Section 121 $250,000 ($500,000 for mfj) 5 year ownership test 2 year use test - principal residence pro-rate for forced sale special rules for mfj filing limit once every two years does not apply to depreciation gain

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Non-taxable exchanges

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  1. Non-taxable exchanges

  2. Sale of a Personal Residence • Section 121 • $250,000 ($500,000 for mfj) • 5 year ownership test • 2 year use test - principal residence • pro-rate for forced sale • special rules for mfj filing • limit once every two years • does not apply to depreciation gain • old section 1034 and 121 rules repealed

  3. Involuntary Conversion • Section 1033 • Property to $ to Property • Elective generally • Qualifying event • theft, casualty, condemnation or sale under threat of condemnation • Time test for reinvestment • Similar or related in use test for replacement property

  4. Like Kind Exchange • Section 1031 • Property to property exchange - no actual or constructive receipt of cash allowed • Eligible property must be held for use in a trade or business or as an investment for profit • ineligible property: inventory, securities, interests in partnerships, trusts or rights in lawsuit • Like kind property: any real estate for any real estate regardless of class; personal property of like class

  5. Like Kind Exchange • No gain or loss shall be recognized on the exchange of property held in a trade or business or for investment if such property is exchanged solely for property of a like kind. • Not like kind property is considered “boot” • Boot received is the measure of recognized gain • Boot is money, debt relief, fmv of not like kind property received

  6. Like Kind Exchanges • Non-simultaneous exchanges • 45 days identify property • 180 days exchange property • Money may remain unpaid or in escrow out of reach of transferor

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