The Like Kind Exchange is a provisional portion of the US Tax code that is used a lot by larger business. Simply put what it allows you to do is to take one business or asset and sell it and buy another or exchange it for another that is similar without having to pay the tax consequences or liability of the sale of the first business or asset.
The Like Kind Exchange is also known as an exchange, because 1031 is the number of the provision in the tax code that allows it. Money can also be postponed when there is the Like Kind exchange that follows a sale.
The basic idea behind the like kind exchange is that there was no financial gain if you simply change your business or assets to another of the same type or style and you are simply exchanging one for another, in essence.
A good example here would be if you own one building, sell it, and purchase another one from the money from the sale.
There are a number of things to remember. Any new asset that is purchased or received must be similar to that which was sold.
You must also turn around and purchase the new asset or property within 180 days from the sale of the first asset or property to take advantage of the Like Kind Exchange tax benefit.
The term is quite flexible in the definition of the IRS tax code, and it said that to be considered the Like Kind Exchange and we quote the code here, where it said that "the nature of the character of the property and not to its grade or quality."
It is a major reason that large enterprises enjoy the Like Kind Exchange. It allows them a method to circumvent the payment of certain amounts of tax by the postponement of the line, creating a sort of tax shelter program so that you can work more or less to cope with your own.
Although there are many more details, too many to cover here in a small space, if you are in business, you may want to consider asking your professional tax about the benefits granted under the provision the Like Kind Exchange and see if anything is beneficial for you from tax.
The Like Kind Exchange is also known as an exchange, because 1031 is the number of the provision in the tax code that allows it. Money can also be postponed when there is the Like Kind exchange that follows a sale.
The basic idea behind the like kind exchange is that there was no financial gain if you simply change your business or assets to another of the same type or style and you are simply exchanging one for another, in essence.
A good example here would be if you own one building, sell it, and purchase another one from the money from the sale.
There are a number of things to remember. Any new asset that is purchased or received must be similar to that which was sold.
You must also turn around and purchase the new asset or property within 180 days from the sale of the first asset or property to take advantage of the Like Kind Exchange tax benefit.
The term is quite flexible in the definition of the IRS tax code, and it said that to be considered the Like Kind Exchange and we quote the code here, where it said that "the nature of the character of the property and not to its grade or quality."
It is a major reason that large enterprises enjoy the Like Kind Exchange. It allows them a method to circumvent the payment of certain amounts of tax by the postponement of the line, creating a sort of tax shelter program so that you can work more or less to cope with your own.
Although there are many more details, too many to cover here in a small space, if you are in business, you may want to consider asking your professional tax about the benefits granted under the provision the Like Kind Exchange and see if anything is beneficial for you from tax.
About the Author:
Anne Durrel comes from California. She has, combined, over 3 years of experience in IRS. You may want to check out her other guide on free tax help tips and irs refund guide.
No comments:
Post a Comment