LIKE-KIND EXCHANGE RELATED PARTY:EXAMPLE 1
01.Core Concepts
Dallas, owner of a large apartment building, engaged in a like-kind exchange with his son, Cade, who owned a smaller rental property. Part of the gain on Dallas’s large apartment building was deferred in a like-kind exchange under Sec. 1031 into the new, smaller property. The next year, Cade announced that he sold the apartment building he received in a like-kind exchange. Since Cade was a related party, and he disposed of the property received in the like-kind exchange within 2 years of the transfer, Dallas will be required to recognize any remaining gain he realized on the transfer of the large apartment building in the same year.