1031 Exchange FAQ - IRS FORM 8824

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If I sell my 1031 Exchange relinquished property in 2010 and purchase my replacement property in 2011, what year do I send the IRS 8824 form?

That is a very common 1031 Exchange question for this time of year. Luckily, the IRS is very specific about this. You need to be sure to file your IRS Form 8824 for the same tax year that you sold your relinquished property. Also, be sure to discuss this at length with your CPA or Tax Attorney.

Related Info: send, 8824, form, 2011, replacement, 2010, relinquished, discuss, length, attorney


After my 1031 Exchange, how soon do I need to report it to the IRS?

Reporting your 1031 Exchange to the IRS is an event that happens when you file your tax return for the year that the 1031 was executed. Your CPA or tax advisor knows to use IRS Form 8824, which is available by clicking here. This document must be completed by your or your tax advisor and returned with you file your taxes. Careful consideration must be used when you fill out this document. Make sure your tax advisor knows all the facts about your property sales and reports the gains and losses properly.

Related Info: report, advisor, document, sales, consideration, taxes, reports


After my 1031 Exchange, I'm going to have a taxable gain. When do I report this?

If you had a taxable gain from your 1031 Exchange, this means you probably received cash as boot from the proceeds of the property you sold. These funds are considered taxable and are included as income in your yearly tax filing. Discuss this at length with your tax advisor. He/she will you figure where and how to report it on your tax form. Remember to use the IRS form 8824 for reporting your 1031 Exchange to the IRS. Your tax advisor has access to it, or you can download it yourself at http://www.irs.gov/pub/irs-pdf/f8824.pdf.

Related Info: report, gain, taxable, going, form, advisor, he/she, figure


What information is requested on Form 8824 for 1031 Exchange?

The following information is requested on IRS Form 8824 for IRS 1031 Exchange. We recommend that you review this with your CPA or tax advisor.
Information on the Like-Kind Exchange


Description of like-kind property given up:
Description of like-kind property received:
Date like-kind property given up was originally acquired (month, day, year)  . . . . . . 3  MM/DD/YYYY
Date you actually transferred your property to other party (month, day, year)   . . . . . 4  MM/DD/YYYY
Date like-kind property you received was identified by written notice to another party (month, day, year). See instructions for 45-day written identification requirement  . . . . . . . 5  MM/DD/YYYY
Date you actually received the like-kind property from other party (month, day, year). See instructions 6  MM/DD/YYYY
Was the exchange of the property given up or received made with a related party, either directly or indirectly (such as through an intermediary)? See instructions. If “Yes,” complete Part II. If “No,” go to Part III  . . . Yes NoPart II Related Party Exchange Information

Name of related party Relationship to you Related party’s identifying number Address (no., street, and apt., room, or suite no., city or town, state, and ZIP code)
During this tax year (and before the date that is 2 years after the last transfer of property that was part of the exchange), did the related party sell or dispose of any part of the like-kind property received from you (or an intermediary) in the exchange or transfer property into the exchange, directly or indirectly (such as through an intermediary), that became your replacement property? . . . . . . . . . . . . . . Yes No
During this tax year (and before the date that is 2 years after the last transfer of property that was part of the exchange), did you sell or dispose of any part of the like-kind property you received?  . . . . . . Yes No
If both lines 9 and 10 are “No” and this is the year of the exchange, go to Part III. If both lines 9 and 10 are “No” and this is not the year of the exchange, stop here. If either line 9 or line 10 is “Yes,” complete Part III and report on this year’s tax return the deferred gain or (loss) from line 24 unless one of the exceptions on line 11 applies.
If one of the exceptions below applies to the disposition, check the applicable box:
a The disposition was after the death of either of the related parties.
b The disposition was an involuntary conversion, and the threat of conversion occurred after the exchange.
c You can establish to the satisfaction of the IRS that neither the exchange nor the disposition had tax avoidance as one of its principal purposes. If this box is checked, attach an explanation (see instructions).
For Paperwork Reduction Act Notice, see page 4 of the instructions.

Part III Realized Gain or (Loss), Recognized Gain, and Basis of Like-Kind Property Received

Caution: If you transferred and received (a) more than one group of like-kind properties or (b) cash or other (not like-kind) property, see Reporting of multi-asset exchanges in the instructions.
Note: Complete lines 12 through 14 only if you gave up property that was not like-kind. Otherwise, go to line 15.
Fair market value (FMV) of other property given up  . . . . . 12
Adjusted basis of other property given up  . . . . . . . . 13
Gain or (loss)  recognized on other property given up. Subtract line 13 from line 12. Report  the gain or (loss) in the same manner as if the exchange had been a sale  . . . . . . . . . 14
Caution: If the property given up was used previously or partly as a home, see Property used as home in the instructions.
Cash  received,  FMV  of  other  property  received,  plus  net  liabilities  assumed  by  other  party, reduced  (but not below zero) by any exchange expenses you incurred (see instructions)  . . 15
FMV of like-kind property you received  . . . . . . . . . . . . . . . . . . . 16
17  Add lines 15 and 16  . . . . . . . . . . . . . . . . . . . . . . . . . 17
18  Adjusted  basis  of  like-kind  property  you  gave  up,  net  amounts  paid  to  other  party,  plus  any exchange expenses not used on line 15 (see instructions)  . . . . . . . . . . . . . 18
Realized gain or (loss).  Subtract line 18 from line 17  . . . . . . . . . . . . . . 19
Enter the smaller of line 15 or line 19, but not less than zero  . . . . . . . . . . . . 20
Ordinary income under recapture rules. Enter here and on Form 4797, line 16 (see instructions)  21
Subtract  line  21  from  line  20.  If  zero  or  less,  enter  -0-.  If  more  than  zero,  enter  here  and  on Schedule D or Form 4797, unless the installment method applies (see instructions)  . . . . 22
Recognized gain.  Add lines 21 and 22  . . . . . . . . . . . . . . . . . . . 23
Deferred gain or (loss). Subtract line 23 from line 19. If a related party exchange, see instructions  . 24
Basis of like-kind property received.  Subtract line 15 from the sum of lines 18 and 23  . . 25Part IV Deferral of Gain From Section 1043 Conflict-of-Interest Sales
Note: This part is to be used only by officers or employees of the executive branch of the Federal Government or judicial officers of the Federal Government (including certain spouses, minor or dependent children, and trustees as described in section 1043) for reporting nonrecognition of gain under section 1043 on the sale of property to comply  with the conflict-ofinterest requirements. This part can be used only if the cost of the replacement property is more than the  basis of the divested property.
Enter  the  number from  the  upper  right  corner  of  your  certificate  of  divestiture. (Do  not  attach  a copy of your certificate. Keep the certificate with your records.)  . . . . . . . . . .
Description of divested property
Description of replacement property
Date divested property was sold (month, day, year)  . . . . . . . . . . . . . . . 29  MM/DD/YYYY
Sales price of divested property (see instructions). . . . . . 30
Basis of divested property  . . . . . . . . . . . . . 31
Realized gain.  Subtract line 31 from line 30  . . . . . . . . . . . . . . . . . 32
Cost of  replacement property purchased within 60 days  after date of sale  . . . . . . . . . . . . . . . . . . . . 33
Subtract line 33 from line 30. If zero or less, enter -0-  . . . . . . . . . . . . . . 34
Ordinary income under recapture rules. Enter here and on Form 4797, line 10 (see instructions)  35
Subtract  line  35  from  line  34.  If  zero  or  less,  enter  -0-.  If  more  than  zero,  enter  here  and  on Schedule D or Form 4797 (see instructions)  . . . . . . . . . . . . . . . . . 36
Deferred gain.  Subtract the sum of lines 35 and 36 from line 32  . . . . . . . . . . 37
Basis of replacement property.  Subtract line 37 from line 33  . . . . . . . . . . . 38

Related Info: 8824, form, requested, information, line, like-kind, instructions, gain, party, date






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