What does like-kind exchange mean on the CPA exam?
Like-kind exchange. A swap of real property held for business or investment, where gain is deferred rather than recognized. Since 2018 it applies to real property only.
Defined against Sec. 1031.
Which CPA exam sections use like-kind exchange?
Like-kind exchange appears in the REG section of the CPA exam.
Other names for like-kind exchange
like-kind
Related terms
- real property: Land and anything permanently attached to it, such as a building.
- capital asset: For tax, almost everything a taxpayer owns EXCEPT inventory, receivables, and depreciable or real property used in a trade or business.
- rental real estate: Real property held to produce rent.
- boot: Anything received in an otherwise tax-free exchange that is not the qualifying property, typically cash or debt relief.
- qualified nonrecourse financing: Borrowing secured by real property from a commercial lender, where nobody is personally liable.
- valuation allowance: The contra account reducing a deferred tax asset to the portion more likely than not to be realized, meaning a likelihood above 50%.