CES Like-Kind Property Requirements

Question 1

Under IRC Section 1031, which of the following best defines 'like-kind' property in a US exchange?

Accepted Answer

Property of the same nature or character, regardless of grade or quality

Answer

Like-kind refers to the nature or character of the property, not its grade, quality, or specific use.

Question 2

Which of the following is NOT eligible as like-kind property in a 1031 exchange?

Accepted Answer

A primary residence

Answer

A primary residence is not held for business or investment purposes and does not qualify for a 1031 exchange.

Question 3

Can US real property be exchanged for foreign real property in a 1031 exchange?

Accepted Answer

No, US real property and foreign real property are not like-kind

Answer

Since the Tax Cuts and Jobs Act of 2017, US real property and foreign real property are not considered like-kind.

Question 4

Which statement about personal property and 1031 exchanges after the Tax Cuts and Jobs Act of 2017 is correct?

Accepted Answer

Personal property was eliminated from 1031 exchange eligibility

Answer

The TCJA eliminated personal property from 1031 exchange eligibility, limiting it to real property only.

Question 5

A taxpayer wants to exchange a ranch used for business purposes for an apartment complex held for investment. Is this a valid like-kind exchange?

Accepted Answer

Yes, because both are US real property held for business or investment

Answer

Real property exchanged for real property qualifies as like-kind regardless of the specific use, as long as both are held for business or investment.

CES - Certified Exchange Specialist Practice Test