LIKE-KIND EXCHANGE RELATED PARTY:EXAMPLE 2
01.Core Concepts
Sophia owns 55% of the equity interest in Cimbel Corporation. Sophia and Cimbel agree to transact a like-kind exchange of a high-rise condominium owned by Cimbel for a warehouse owned by Sophia. Sophia subsequently sells the high-rise condominium 18 months later. Cimbel will be required to recognize the deferred gain on the transfer of the high-rise condominium since Sophia is a related party (a taxpayer who owns more than 50% of the equity interest in the corporation) and the property received in the like-kind exchange was sold within two years of the original exchange transaction.