Form 8824 - Like-Kind Exchanges - 2004


Form 8824 (2004)
Generally, a disqualified person is either
Line 11c. If you believe that you can
Reporting of multi-asset exchanges. If
your agent at the time of the transaction or a
establish to the satisfaction of the IRS that
you transferred and received (a) more than
person related to you. For more details, see
tax avoidance was not a principal purpose of
one group of like-kind properties or
Regulations section 1.1031(k)-1(k).
both the exchange and the disposition, attach
(b) cash or other (not like-kind) property, do
an explanation. Generally, tax avoidance will
not complete lines 12 through 18 of Form
Note. If you received the replacement
not be seen as a principal purpose in the
8824. Instead, attach your own statement
property before the end of the 45-day period,
showing how you figured the realized and
case of:
you automatically are treated as having met
● A disposition of property in a
recognized gain, and enter the correct
the 45-day written notice requirement. In this
amount on lines 19 through 25. Report any
nonrecognition transaction,
case, enter on line 5 the date you received
● An exchange in which the related parties
recognized gains on Schedule D; Form 4797,
the replacement property.
Sales of Business Property; or Form 6252,
derive no tax advantage from the shifting of
Line 6. Enter on line 6 the date you received
Installment Sale Income, whichever applies.
basis between the exchanged properties, or
the like-kind property from the other party.
● An exchange of undivided interests in
Exchanges using a qualified exchange
The property must be received by the earlier
accommodation arrangement (QEAA). If
different properties that results in each related
of the following dates.
property is transferred to an exchange
party holding either the entire interest in a
● The 180th day after the date you
accommodation titleholder (EAT) and held in a
single property or a larger undivided interest
transferred the property given up in the
QEAA, the EAT may be treated as the
in any of the properties.
beneficial owner of the property, the property
Lines 12, 13, and 14. If you gave up other
● The due date (including extensions) of your
transferred from the EAT to you may be
property in addition to the like-kind property,
tax return for the year in which you
treated as property you received in an
enter the fair market value (FMV) and the
transferred the property given up.
exchange, and the property you transferred to
adjusted basis of the other property on lines
Line 7. Special rules apply to like-kind
the EAT may be treated as property you gave
12 and 13, respectively. The gain or (loss)
exchanges made with related parties, either
up in an exchange. This may be true even if
from this property is figured on line 14 and
directly or indirectly. A related party includes
the property you are to receive is transferred
must be reported on your return. Report gain
your spouse, child, grandchild, parent,
to the EAT before you transfer the property
or (loss) as if the exchange were a sale.
grandparent, brother, sister, or a related
you are giving up. However, the property
Line 15. Include on line 15 the sum of:
corporation, S corporation, partnership, trust,
transferred to you may not be treated as
● Any cash paid to you by the other party,
or estate. See section 1031(f).
property received in an exchange if you
● The FMV of other (not like-kind) property
previously owned it within 180 days of its
An exchange made indirectly with a
you received, if any, and
transfer to the EAT. For details, see Rev.
related party includes:
● Net liabilities assumed by the other
Proc. 2000-37 as modified by Rev. Proc.
● An exchange made with a related party
2004-51. Rev. Proc. 2000-37 is on page 308
party—the excess, if any, of liabilities
through an intermediary (such as a qualified
of Internal Revenue Bulletin 2000-40 at
(including mortgages) assumed by the other
intermediary or an exchange accommodation
party over the total of (a) any liabilities you
titleholder, as defined in Pub. 544), or
Proc. 2004-51 is on page 294 of Internal
assumed, (b) cash you paid to the other
● An exchange made by a disregarded entity
Revenue Bulletin 2004-33 at
party, and (c) the FMV of the other (not
(such as a single member limited liability
like-kind) property you gave up.
company) if you or a related party owned that
Additional information. For more information
Reduce the sum of the above amounts (but
on like-kind exchanges, see section 1031 and
not below zero) by any exchange expenses
If the related party (either directly or
its regulations and Pub. 544.
you incurred. See the example on page 4.
indirectly) or you dispose of the property
The following rules apply in determining the
received in an exchange before the date that
Specific Instructions
amount of liability treated as assumed.
is 2 years after the last transfer of property
● A recourse liability (or portion thereof) is
from the exchange, the deferred gain or (loss)
Lines 1 and 2. For real property, enter the
from line 24 must be reported on your return
treated as assumed by the party receiving the
address and type of property. For personal
for the year of disposition (unless an
property if that party has agreed to and is
property, enter a short description. For
exception on line 11 applies).
expected to satisfy the liability (or portion
property located outside the United States,
thereof). It does not matter whether the party
If you are filing this form for 1 of the 2
include the country.
transferring the property has been relieved of
years following the year of the exchange,
Line 5. Enter on line 5 the date of the written
the liability.
complete Parts I and II. If both lines 9 and 10
notice that identifies the like-kind property
● A nonrecourse liability generally is treated
are “No,” stop.
you received in a deferred exchange. To
as assumed by the party receiving the
If either line 9 or line 10 is “Yes,” and an
comply with the 45-day written notice
property subject to the liability. However, if an
exception on line 11 applies, check the
requirement, the following conditions must
owner of other assets subject to the same
applicable box on line 11, attach any required
be met.
liability agrees with the party receiving the
explanation, and stop. If no line 11
1. The like-kind property you receive in a
property to, and is expected to, satisfy part or
exceptions apply, complete Part III. Report
deferred exchange must be designated in
all of the liability, the amount treated as
the deferred gain or (loss) from line 24 on this
writing as replacement property either in a
assumed is reduced by the smaller of (a) the
year’s tax return as if the exchange had been
document you signed or in a written
amount of the liability that the owner of the
a sale.
agreement signed by all parties to the
other assets has agreed to and is expected to
An exchange structured to avoid the
satisfy or (b) the FMV of those other assets.
related party rules is not a like-kind exchange
2. The document or agreement must
Line 18. Include on line 18 the sum of:
and may not be reported on Form 8824.
describe the replacement property in a clear
● The adjusted basis of the like-kind property
Instead, you should report the disposition of
and recognizable manner. Real property
you gave up,
the property given up as if the exchange had
should be described using a legal description,
● Exchange expenses, if any (except for
been a sale. See section 1031(f)(4). Such an
street address, or distinguishable name (for
exchange includes the transfer of property
expenses used to reduce the amount
example, “Mayfair Apartment Building”).
you gave up to a qualifed intermediary in
reported on line 15), and
3. No later than 45 days after the date you
exchange for property you received that was
● Net amount paid to the other party—the
transferred the property you gave up:
formerly owned by a related party if the
excess, if any, of the total of (a) any liabilities
related party received cash or other (not
a. You must send, fax, or hand deliver the
you assumed, (b) cash you paid to the other
like-kind) property for the property you
document you signed to the person required
party, and (c) the FMV of the other (not
received, and you used the qualified
to transfer the replacement property to you
like-kind) property you gave up over any
intermediary to avoid the application of the
(including a disqualified person) or to another
liabilities assumed by the other party.
related party rules. See Rev. Rul. 2002-83 for
person involved in the exchange (other than a
See Regulations section 1.1031(d)-2 and
more details. You can find Rev. Rul. 2002-83
disqualified person), or
the following example for figuring amounts to
on page 927 of Internal Revenue Bulletin
b. All parties to the exchange must sign the
enter on lines 15 and 18.
2002-49 at
written agreement designating the
replacement property.


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