The uses of every possession are two, both dependent upon the thing itself, but not in the same manner, the one supposing an inseparable connection with it, the other not; as a shoe, for instance, which may be either worn, or exchanged for
something else, both these are the uses of the shoe; for he who exchanges a shoe with some man who wants one, for money or provisions, uses the shoe as a shoe, but not according to the original intention, for shoes were not at first made to be exchanged.
Reverse exchanges are particularly valuable when multiple properties are exchanged for
a single replacement property.
Thus, land can be exchanged for improved real estate under Regs.
When the improvements are constructed and become part of the replacement property, that property (including the newly constructed improvements) is then exchanged for the relinquished property.
1031 exchanges do not recognize any gain or loss on the exchange of property held for productive use in a trade or business, or for investment, if such property is exchanged for
property of like kind, which is to be held either for productive use in a trade or business or for investment.
Depreciable tangible personal property qualifies for nonrecognition treatment if it is exchanged for property that is either of a "like kind" or of a "like class.
If automobiles and computers are exchanged for other automobiles and computers, two exchange groups are created, one consisting of the automobiles transferred and received and the second consisting of the computers transferred and received.
The tax law allows real estate held for investment or used in a trade or business to be exchanged for
other real estate.
1031(a)(1) provides for nonrecognition of gain or loss when property held for investment or trade or business use is exchanged for
like-kind property held for investment or trade or business use.
354 and 356 (nonrecognition treatment) if, in pursuance of the plan of reorganization, securities of the surviving corporation are exchanged for
securities of the controlling corporation or for other securities of the surviving corporation.
1031 (a)-1 (b) states that "like-kind" property refers to the nature or character of the property, not to its grade or quality; thus, real property exchanged for
real property will qualify as like kind regardless of the state of improvement of the property.
1031, gains can be deferred when the taxpayer's property is exchanged for
other property in a transaction that meets three basic requirements.