A like-kind exchange is a real estate transaction in which both buyer and seller cooperate to avoid paying capital gains tax. In general, a like-kind exchange is beneficial for taxpayers as it basically allows them to defer a capital gain or loss on the sale. However, there are situations when a taxpayer may want to avoid having an exchange qualify as a like-kind exchange. In particular, one may suppose that a taxpayer may want to recognize a gain on the exchange. This would allow a taxpayer to be in a low tax bracket to offset the gain. Apart from that, in case the exchange is taxable, an individual can expect that the basis of the property obtained will be higher.
Why might a taxpayer want to avoid having an exchange qualify as a like-kind exchange?
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Academic.Tips. (2021, August 10). Why might a taxpayer want to avoid having an exchange qualify as a like-kind exchange? https://academic.tips/question/why-might-a-taxpayer-want-to-avoid-having-an-exchange-qualify-as-a-like-kind-exchange/
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Academic.Tips. 2021. "Why might a taxpayer want to avoid having an exchange qualify as a like-kind exchange?" August 10, 2021. https://academic.tips/question/why-might-a-taxpayer-want-to-avoid-having-an-exchange-qualify-as-a-like-kind-exchange/.
1. Academic.Tips. "Why might a taxpayer want to avoid having an exchange qualify as a like-kind exchange?" August 10, 2021. https://academic.tips/question/why-might-a-taxpayer-want-to-avoid-having-an-exchange-qualify-as-a-like-kind-exchange/.
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Academic.Tips. "Why might a taxpayer want to avoid having an exchange qualify as a like-kind exchange?" August 10, 2021. https://academic.tips/question/why-might-a-taxpayer-want-to-avoid-having-an-exchange-qualify-as-a-like-kind-exchange/.
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"Why might a taxpayer want to avoid having an exchange qualify as a like-kind exchange?" Academic.Tips, 10 Aug. 2021, academic.tips/question/why-might-a-taxpayer-want-to-avoid-having-an-exchange-qualify-as-a-like-kind-exchange/.
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