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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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If I sell a small business(insurance agency) can I purchase

Customer Question

If I sell a small business(insurance agency) can I purchase another business (real estate or other insurance agency) without paying capital gains tax?
Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

You might asking about section 1031 like-kind exchange that allows to defer (not avoid!) tax liability realized from selling some business or investment assets.

Yes - that is possible.
The "business" itself is not qualified asset for section 1031, but teh business is normally a set of assets and some might qualify.

For instance if you have a real estate as a part of your business that you are selling - and you may defer the gain realized of that rear estate by purchasing another real estate which will be used for business or rental.

So - if you list assets which constitute your sale - we may verify if any assets qualify for section 1031.

Here is actual statute

https://www.law.cornell.edu/uscode/text/26/1031

(1) In general

No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.

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