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RD, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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I cashed in a 1031 like kind exchange in 2010. Are my taxes

Resolved Question:

I cashed in a 1031 like kind exchange in 2010. Are my taxes based on the value of the final property the amount I paid for that property or the amount I sold it for.
Submitted: 3 years ago.
Category: Tax
Expert:  RD replied 3 years ago.

Your taxes will be based on the gain on sale of the property. Gain will be calculated as the sales price less the selling expenses less the adjusted basis of the property. This adjusted basis of the property is the basis determined at the time of Sec 1031 exchange as per the IRS rules. It may be the original cost basis of the property in Sec 1031 exchange less depreciation claimed on that property and the new property and increased by any additional amount paid.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 3 years ago.
So... if the purchase price was of the 1031 property was $600K but it was sold but it was sold at $500K ... my taxes are based on the $500K? Thanks so very much.
Expert:  RD replied 3 years ago.
No, the basis of the property will be determined based on the adjusted basis of the original property that was sold in a like kind transactions.

Most likely you must have filed Form 8824 when reporting the like kind exchange. This will provide you the basis of the property received.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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