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Section 1.1031 of the Treasury Regulations

TITLE 26 -- INTERNAL REVENUE SERVICE REGULATIONS

CHAPTER I -- INTERNAL REVENUE SERVICE
DEPARTMENT OF THE TREASURY

SUBCHAPTER A -- INCOME TAX

PART 1 -- INCOME TAXES

NORMAL TAXES AND SURTAXES

GAIN OR LOSS ON DISPOSITION OF PROPERTY

COMMON NONTAXABLE EXCHANGES



Section 1.1031-0 Index


§ 1.1031-0
Index

§ 1.1031 (a)-1
Property held for productive use in a trade or business or for investment

§ 1.1031 (a)-1(a)
In general

§ 1.1031 (a)-1(a)(1) Exchanges of property solely for property of a like kind

§ 1.1031 (a)-1(a)(2) Exchanges of property not solely for property of a like kind

§ 1.1031 (a)-1(b)
Definition of like kind

§ 1.1031 (a)-1(c)
Examples of exchanges of property of a "like kind"

§ 1.1031 (a)-1(d)
Examples of exchanges not solely in kind

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§ 1.1031 (a)-1(e)
Effective date

§ 1.1031(a)-2
Additional rules for exchanges of personal property

§ 1.1031 (a)-2(a)
Introduction

§ 1.1031 (a)-2(b)
Depreciable tangible personal property

§ 1.1031 (a)-2(b)(1) General Rule

§ 1.1031 (a)-2(b)(2) General Asset Classes

§ 1.1031 (a)-2(b)(3) Product Classes

§ 1.1031 (a)-2(b)(4) Modifications of NAICS product classes

§ 1.1031 (a)-2(b)(5) Administrative procedures for revising general asset classes

§ 1.1031 (a)-2(c)
Intangible personal property and nondepreciable personal property

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§ 1.1031 (a)-2(d)
Effective Date

§ 1.1031 (b)-1
Receipt of other property or money in tax-free exchange

§ 1.1031 (b)-2
Safe harbor for Qualified Intermediaries (Accommodators)

§ 1.1031 (c)-1
Nonrecognition of loss

§ 1.1031 (d)-1
Property acquired upon a tax-free exchange.

§ 1.1031 (d)-1T
Coordination of section 1060 with section 1031 (temporary)

§ 1.1031 (d)-2
Treatment of assumption of liabilities

§ 1.1031 (e)-1
Exchanges of livestock of different sexes

§ 1.1031 (j)-1
Exchanges of multiple properties

§ 1.1031 (j)-1(a)
Introduction

§ 1.1031 (j)-1(b)
Computation of gain recognized

§ 1.1031 (j)-1(c)
Computation of basis of properties received

§ 1.1031 (j)-1(d)
Examples

§ 1.1031 (j)-1(e)
Effective date

§ 1.1031 (k)-1
Treatment of deferred exchanges

§ 1.1031 (k)-1(a)
Overview

§ 1.1031 (k)-1(b)
Identification and receipt requirements

§ 1.1031 (k)-1(c)
Identification of replacement property before end of identification
period

§ 1.1031 (k)-1(d)
Receipt of identified replacement property

§ 1.1031 (k)-1(e)
Special rules for identification and receipt of replacement property

to be produced.
§ 1.1031 (k)-1(f)
Receipt of money or other property

§ 1.1031 (k)-1(g)
Safe harbors

§ 1.1031 (k)-1(h)
Interest and growth factors

§ 1.1031 (k)-1(i)
[Reserved]

§ 1.1031 (k)-1(j)
Determination of gain or loss recognized and the basis of property

received in a deferred exchange

§ 1.1031 (k)-1(k)
Definition of disqualified person

§ 1.1031 (k)-1(l)
[Reserved]

§ 1.1031 (k)-1(m) Definition of fair market value

§ 1.1031 (k)-1(n)
No inference with respect to actual or constructive receipt rules

outside of section 1031.

§ 1.1031 (k)-1(o)
Effective date.


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END OF INDEX
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§ 1.1031(a)-1 Property held for productive use in a trade or business or for investment.

(a) In general

(1) Exchanges of property solely for property of a like kind.

Section 1031(a)(1) provides an exception from the general rule requiring the
recognition of gain or loss upon the sale or exchange of property. Under section
1031(a)(1), no gain or loss is recognized if property held for productive use in a trade
or business or for investment is exchanged solely for property of a like kind to be held
either for productive use in a trade or business or for investment. Under section
1031(a)(1), property held for productive use in a trade or business may be exchanged
for property held for investment. Similarly, under section 1031(a)(1), property held for
investment may be exchanged for property held for productive use in a trade or
business. However, section 1031(a)(2) provides that section 1031(a)(1) does not apply
to any exchange of--

(i) Stock in trade or other property held primarily for sale;

(ii) Stocks, bonds, or notes;

(iii) Other securities or evidences of indebtedness or interest;

(iv) Interests in a partnership;

(v) Certificates of trust or beneficial interests; or

(vi) Choses in action.

Section 1031(a)(1) does not apply to any exchange of interests in a partnership
regardless of whether the interests exchanged are general or limited partnership
interests or are interests in the same partnership or in different partnerships. An
interest in a partnership that has in effect a valid election under section 761(a) to be
excluded from the application of all of subchapter K is treated as an interest in each of
the assets of the partnership and not as an interest in a partnership for purposes of
section 1031(a)(2)(D) and paragraph (a)(1)(iv) of this section. An exchange of an
interest in such a partnership does not qualify for nonrecognition of gain or loss under
section 1031 with respect to any asset of the partnership that is described in section
1031(a)(2) or to the extent the exchange of assets of the partnership does not
otherwise satisfy the requirements of section 1031(a).

(2) Exchanges of property not solely for property of a like kind.

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A transfer is not within the provisions of section 1031(a) if, as part of the
consideration, the taxpayer receives money or property which does not meet the
requirements of section 1031(a), but the transfer, if otherwise qualified, will be within
the provisions of either section 1031 (b) or (c). Similarly, a transfer is not within the
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provisions of section 1031(a) if, as part of the consideration, the other party to the
exchange assumes a liability of the taxpayer (or acquires property from the taxpayer
that is subject to a liability), but the transfer, if otherwise qualified, will be within the
provisions of either section 1031 (b) or (c). A transfer of property meeting the
requirements of section 1031(a) may be within the provisions of section 1031(a) even
though the taxpayer transfers in addition property not meeting the requirements of
section 1031(a) or money. However, the nonrecognition treatment provided by section
1031(a) does not apply to the property transferred which does not meet the
requirements of section 1031(a).

(b) Definition of "like kind."

As used in section 1031(a), the words like kind have reference to the nature or
character of the property and not to its grade or quality. One kind or class of property
may not, under that section, be exchanged for property of a different kind or class. The
fact that any real estate involved is improved or unimproved is not material, for that
fact relates only to the grade or quality of the property and not to its kind or class.
Unproductive real estate held by one other than a dealer for future use or future
realization of the increment in value is held for investment and not primarily for sale.
For additional rules for exchanges of personal property, see § 1.1031 (a)-2.

(c) Examples of exchanges of property of a "like kind."

No gain or loss is recognized if (1) a taxpayer exchanges property held for productive
use in his trade or business, together with cash, for other property of like kind for the
same use, such as a truck for a new truck or a passenger automobile for a new
passenger automobile to be used for a like purpose; or (2) a taxpayer who is not a
dealer in real estate exchanges city real estate for a ranch or farm, or exchanges a
leasehold of a fee with 30 years or more to run for real estate, or exchanges improved
real estate for unimproved real estate; or (3) a taxpayer exchanges investment property
and cash for investment property of a like kind.

(d) Examples of exchanges not solely in kind.

Gain or loss is recognized if, for instance, a taxpayer exchanges (1) Treasury bonds
maturing March 15, 1958, for Treasury bonds maturing December 15, 1968, unless
section 1037(a) (or so much of section 1031 as relates to section 1037(a)) applies to
such exchange, or (2) a real estate mortgage for consolidated farm loan bonds.

(e) Effective date relating to exchanges of partnership interests.

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