The Like Kind Exchange has a provisional nature of the U.S. tax code, which is widely used by large companies. Simply put what you can do is to take a business or assets and to sell and buy another, or exchange it for another that is similar, without having to pay the tax or responsibility for the consequences of the first sale of the business or assets.
The Like Kind Exchange is also known as a 1031 exchange because that is the number of the provision in the tax code that allows for it. The money can also be deferred until a later time when there is no Like Kind Exchange taking place after a sale.
The basic idea behind the Like Kind Exchange is that there has been no financial gain if you merely change one business or asset for another of similar type or style and you are simply swapping one for the other, in essence.
A good example would be the case if you own a building, sell it, and buy another of 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 have to turn around and buy the new assets or property within 180 days of the first sale of the property or assets to enjoy the Like Kind Exchange tax.
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.
While there are a lot more details, too many to cover here in such a small space, if you are in business you may want to consider asking your tax professional about the benefits afforded under the Like Kind Exchange provision and see if there is anything there that may be advantageous to you from a tax standpoint.
The Like Kind Exchange is also known as a 1031 exchange because that is the number of the provision in the tax code that allows for it. The money can also be deferred until a later time when there is no Like Kind Exchange taking place after a sale.
The basic idea behind the Like Kind Exchange is that there has been no financial gain if you merely change one business or asset for another of similar type or style and you are simply swapping one for the other, in essence.
A good example would be the case if you own a building, sell it, and buy another of 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 have to turn around and buy the new assets or property within 180 days of the first sale of the property or assets to enjoy the Like Kind Exchange tax.
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.
While there are a lot more details, too many to cover here in such a small space, if you are in business you may want to consider asking your tax professional about the benefits afforded under the Like Kind Exchange provision and see if there is anything there that may be advantageous to you from a tax standpoint.
About the Author:
Her name is Anne Durrel, originally comes from California. She has written several articles about IRS . Check out her other guide on federal tax table tips, and irs tax return guide!
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