CES Like-Kind Property Requirements 3

Question 1

A taxpayer relinquishes a duplex held for rental income and wishes to acquire a single-family home as a rental. Is this a valid like-kind exchange?

Accepted Answer

Yes, because both are real property held for investment

Answer

No, because the property types are too different

Answer

No, because duplexes and single-family homes have different uses

Answer

Yes, but only if values are identical

Question 2

Which of the following would disqualify a property from a 1031 exchange because it is 'held primarily for sale'?

Accepted Answer

A house flipped by a dealer after 90 days

Answer

A commercial warehouse leased to tenants

Answer

Farmland rented to agricultural operators

Answer

A storage facility held for five years

Question 3

Can a taxpayer exchange one property for multiple replacement properties in a 1031 exchange?

Accepted Answer

Yes, as long as identification rules are followed

Answer

No, only one-to-one exchanges are permitted

Answer

Yes, but only if the replacement properties are in the same state

Answer

No, unless the QI specifically approves it

Question 4

What is the primary distinguishing factor between investment property and dealer property for 1031 exchange purposes?

Accepted Answer

The intent of the taxpayer at the time of purchase and sale

Answer

The dollar value of the property

Answer

The number of years the property was owned

Answer

Whether the property is financed or owned free and clear

Question 5

Which of the following would be considered like-kind to an office building in a 1031 exchange?

Accepted Answer

A hotel property held for investment

Answer

Corporate stock in a real estate trust

Answer

A promissory note secured by real estate

Answer

An interest in a real estate partnership

Question 6

When does the IRS look at whether property was 'held for productive use in trade or business or for investment'?

Accepted Answer

At both the time of relinquishment and at the time of acquisition of the replacement property

Answer

Only at the time the exchange is initiated

Answer

Only when the replacement property is sold

Answer

Only when the taxpayer files a 1031 election with the IRS