Looking for a Form 8824 Templates? Download it for free!

accommodation titleholder, as defined in

liabilities you assumed, (b) cash you paid

An exchange in which the related

Pub. 544), or

to the other party, and (c) the FMV of the

parties derive no tax advantage from the

other (not like-kind) property you gave up

An exchange made by a disregarded

shifting of basis between the exchanged

entity (such as a single member limited

properties, or

over any liabilities assumed by the other

party.

liability company) if you or a related party

An exchange of undivided interests in

owned that entity.

different properties that results in each

See Regulations section 1.1031(d)-2

related party holding either the entire

and the following example for figuring

An exchange structured to avoid the

interest in a single property or a larger

amounts to enter on lines 15 and 18.

related party rules is not a like-kind

undivided interest in any of the properties.

exchange. Do not report it on Form 8824.

Example. A owns an apartment house

Instead, you should report the disposition

Lines 12, 13, and 14. Line 12 should be

with an FMV of $220,000, an adjusted

of the property given up as if the exchange

completed if other property that does not

basis of $100,000, and subject to a

had been a sale. See section 1031(f)(4).

qualify as like kind was part of the

mortgage of $80,000. B owns an

Such an exchange includes the transfer of

exchange, in addition to the like-kind

apartment house with an FMV of

property you gave up to a qualified

property. Enter the fair market value

$250,000, an adjusted basis of $175,000,

intermediary in exchange for property you

(FMV) and the adjusted basis of the other

and subject to a mortgage of $150,000.

received that was formerly owned by a

property on lines 12 and 13, respectively.

A transfers his apartment house to B

related party if the related party received

The gain or (loss) from this property is

and receives in exchange B's apartment

cash or other (not like-kind) property for

figured on line 14 and must be reported on

house plus $40,000 cash. A assumes the

the property you received, and you used

your return. Report gain or (loss) as if the

mortgage on the apartment house

the qualified intermediary to avoid the

exchange were a sale.

received from B, and B assumes the

application of the related party rules. See

Line 15. Include on line 15 the sum of:

mortgage on the apartment house

Rev. Rul. 2002-83 for more details. You

Any cash paid to you by the other party,

received from A.

can find Rev. Rul. 2002-83 on page 927 of

The FMV of other (not like-kind)

Internal Revenue Bulletin 2002-49 at

A enters on line 15 only the $40,000

property you received, if any, and

cash received from B. The $80,000 of

Net liabilities assumed by the other

liabilities assumed by B is not included

If, after the exchange, you own

party—the excess, if any, of liabilities

because it does not exceed the $150,000

replacement property that a

(including mortgages) assumed by the

of liabilities A assumed. A enters $170,000

related party sold into the

other party over the total of (a) any

on line 18—the $100,000 adjusted basis,

CAUTION

exchange through an unrelated party such

liabilities you assumed, (b) cash you paid

plus the $70,000 excess of the liabilities A

as a qualified intermediary, do not report

to the other party, and (c) the FMV of the

assumed over the liabilities assumed by B

the transaction on Form 8824 unless one

other (not like-kind) property you gave up.

($150,000 - $80,000).

of the exceptions on line 11 applies.

See the example in the instructions for

B enters $30,000 on line 15—the

Instead, report the disposition of the

line 18.

excess of the $150,000 of liabilities

property given up as if the exchange had

assumed by A over the total ($120,000) of

Reduce the sum of the above amounts

been a sale.

the $80,000 of liabilities B assumed and

(but not below zero) by any exchange

If you or the related party (either

the $40,000 cash B paid. B enters on

expenses you incurred.

directly or indirectly) dispose of property

line 18 only the adjusted basis of

The following rules apply in

received in an exchange before the date

$175,000 because the total of the $80,000

determining the amount of liability treated

that is 2 years after the last transfer which

of liabilities B assumed and the $40,000

as assumed.

was part of the exchange, the deferred

cash B paid does not exceed the

A recourse liability (or portion thereof) is

gain or (loss) from line 24 must be

$150,000 of liabilities assumed by A.

treated as assumed by the party receiving

reported on your return for the year of

the property if that party has agreed to and

Line 21. If you disposed of section 1245,

disposition (unless an exception on line 11

is expected to satisfy the liability (or

1250, 1252, 1254, or 1255 property (see

applies).

portion thereof). It does not matter

the instructions for Part III of Form 4797),

If you are filing this form for 1 of the 2

whether the party transferring the property

you may be required to recapture as

years following the year of the exchange,

has been relieved of the liability.

ordinary income part or all of the realized

complete Parts I and II. If both lines 9 and

A nonrecourse liability generally is

gain (line 19). Figure the amount to enter

10 are “No,” stop. You do not have to

treated as assumed by the party receiving

on line 21 as follows:

complete Part III.

the property subject to the liability.

Section 1245 property. Enter the

If either line 9 or line 10 is “Yes,” and an

However, if an owner of other assets

smaller of:

exception on line 11 applies, check the

subject to the same liability agrees with

1. The total adjustments for

applicable box on line 11, attach any

the party receiving the property to, and is

deductions (whether for the same or other

required explanation, and stop. If no

expected to, satisfy part or all of the

property) allowed or allowable to you or

line 11 exceptions apply, complete Part III.

liability, the amount treated as assumed is

any other person for depreciation or

Report the deferred gain or (loss) from

reduced by the smaller of (a) the amount

amortization (up to the amount of gain

line 24 on this year's tax return as if the

of the liability that the owner of the other

shown on line 19), or

exchange had been a sale.

assets has agreed to and is expected to

satisfy or (b) the FMV of those other

2. The gain shown on line 20, if any,

Line 11c. If you believe that you can

assets.

plus the FMV of non-section 1245

establish to the satisfaction of the IRS that

like-kind property received.

tax avoidance was not a principal purpose

Line 18. Include on line 18 the sum of:

of both the exchange and the disposition,

The adjusted basis of the like-kind

Section 1250 property. Enter the

attach an explanation. Generally, tax

property you gave up,

smaller of:

avoidance will not be seen as a principal

Exchange expenses, if any (except for

1. The gain you would have had to

purpose in the case of:

expenses used to reduce the amount

report as ordinary income because of

A disposition of property in a

reported on line 15), and

additional depreciation if you had sold the

nonrecognition transaction,

Net amount paid to the other party—the

excess, if any, of the total of (a) any

2015 Instructions for Form 8824

-3-

Instructions For Form 8824 - Like-Kind Exchanges (And Section 1043 Conflict-Of-Interest Sales) - 2015 Page 3

Related Articles

Related forms

Related Categories