No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.
This subsection shall not apply to any exchange of -
For purposes of this section, an interest in a partnership which has in effect a valid election under section 761(a) to be excluded from the application of all of subchapter K shall be treated as an interest in each of the assets of such partnership and not as an interest in a partnership.
For purposes of this subsection, any property received by the taxpayer shall be treated as property which is not like-kind property if -
If an exchange would be within the provisions of subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain, but also of other property or money, then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property.
If an exchange would be within the provisions of subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized.
If property was acquired on an exchange described in this section, section 1035(a), section 1036(a), or section 1037(a), then the basis shall be the same as that of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized on such exchange. If the property so acquired consisted in part of the type of property permitted by this section, section 1035(a), section 1036(a), or section 1037(a), to be received without the recognition of gain or loss, and in part of other property, the basis provided in this subsection shall be allocated between the properties (other than money) received, and for the purpose of the allocation there shall be assigned to such other property an amount equivalent to its fair market value at the date of the exchange. For purposes of this section, section 1035(a), and section 1036(a), where as part of the consideration to the taxpayer another party to the exchange assumed a liability of the taxpayer or acquired from the taxpayer property subject to a liability, such assumption or acquisition (in the amount of the liability) shall be considered as money received by the taxpayer on the exchange.
For purposes of this section, livestock of different sexes are not property of a like kind.
If -
there shall be no nonrecognition of gain or loss under this section to the taxpayer with respect to such exchange; except that any gain or loss recognized by the taxpayer by reason of this subsection shall be taken into account as of the date on which the disposition referred to in subparagraph (C) occurs.
For purposes of paragraph (1)(C), there shall not be taken into account any disposition -
For purposes of this subsection, the term 'related person' means any person bearing a relationship to the taxpayer described in section 267(b) or 707(b)(1).
This section shall not apply to any exchange which is part of a transaction (or series of transactions) structured to avoid the purposes of this subsection.
If paragraph (2) applies to any property for any period, the running of the period set forth in subsection (f)(1)(C) with respect to such property shall be suspended during such period.
This paragraph shall apply to any property for any period during which the holder's risk of loss with respect to the property is substantially diminished by -
For purposes of this section, real property located in the United States and real property located outside the United States are not property of a like kind.
(Aug. 16, 1954, ch. 736, 68A Stat. 302; Sept. 2, 1958, Pub. L. 85-866, title I, Sec. 44, 72 Stat. 1641; Sept. 22, 1959, Pub. L. 86-346, title II, Sec. 201(c)-(e), 73 Stat. 624; Dec. 30, 1969, Pub. L. 91-172, title II, Sec. 212(c)(1), 83 Stat. 571; July 18, 1984, Pub. L. 98-369, div. A, title I, Sec. 77(a), 98 Stat. 595; Oct. 22, 1986, Pub. L. 99-514, title XVIII, Sec. 1805(d), 100 Stat. 2810; Dec. 19, 1989, Pub. L. 101-239, title VII, Sec. 7601(a), 103 Stat. 2370; Nov. 5, 1990, Pub. L. 101-508, title XI, Sec. 11701(h), 11703(d)(1), 104 Stat. 1388-508, 1388-517.)
1990 - Subsec. (a)(2). Pub. L. 101-508, Sec. 11703(d)(1), inserted at end 'For purposes of this section, an interest in a partnership which has in effect a valid election under section 761(a) to be excluded from the application of all of subchapter K shall be treated as an interest in each of the assets of such partnership and not as an interest in a partnership.'
Subsec. (f)(3). Pub. L. 101-508, Sec. 11701(h), substituted 'section 267(b) or 707(b)(1)' for 'section 267(b)'.
1989 - Subsecs. (f) to (h). Pub. L. 101-239 added subsecs. (f) to (h).
1986 - Subsec. (a)(3)(A). Pub. L. 99-514 substituted 'on or before the day' for 'before the day'.
1984 - Subsec. (a). Pub. L. 98-369, Sec. 77(a), in amending subsec. generally, designated existing provisions as par. (1), substituted 'No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment' for 'No gain or loss shall be recognized if property held for productive use in trade or business or for investment (not including stock in trade or other property held primarily for sale, nor stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest) is exchanged solely for property of a like kind to be held either for productive use in trade or business or for investment', and added pars. (2) and (3).
1969 - Subsec. (e). Pub. L. 91-172 added subsec. (e).
1959 - Subsecs. (b) to (d). Pub. L. 86-346 inserted references to section 1037(a) in subsecs. (b) and (c) and in first two sentences of subsec. (d).
1958 - Subsec. (d). Pub. L. 85-866 inserted in first sentence a comma between 'exchanged' and 'decreased' and 'or decreased in the amount of loss', and substituted in second sentence 'subsection' for 'paragraph'.
Section 11701(h) of Pub. L. 101-508 provided that the amendment made by that section is effective with respect to transfers after Aug. 3, 1990.
Section 11703(d)(2) of Pub. L. 101-508 provided that: 'The amendment made by paragraph (1) (amending this section) shall apply to transfers after July 18, 1984.'
Section 7601(b) of Pub. L. 101-239 provided that:
'(1) In general. - Except as provided in paragraph (2), the amendments made by this section (amending this section) shall apply to transfers after July 10, 1989, in taxable years ending after such date.
'(2) Binding contract. - The amendments made by this section shall not apply to any transfer pursuant to a written binding contract in effect on July 10, 1989, and at all times thereafter before the transfer.'
Amendment by Pub. L. 99-514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99-514, set out as a note under section 48 of this title.
Section 77(b) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
'(1) In general. - Except as otherwise provided in this
subsection, the amendment made by subsection (a) (amending this
section) shall apply to transfers made after the date of the
enactment of this Act (July 18, 1984) in taxable years ending after
such date.
'(2) Binding contract exception for transfer of partnership
interests. - Paragraph (2)(D) of section 1031(a) of the Internal
Revenue Code of 1986 (formerly I.R.C. 1954) (as amended by
subsection (a)) shall not apply in the case of any exchange
pursuant to a binding contract in effect on March 1, 1984, and at
all times thereafter before the exchange.
'(3) Requirement that property be identified within 45 days and
that exchange be completed within 180 days. - Paragraph (3) of
section 1031(a) of the Internal Revenue Code of 1986 (as amended by
subsection (a)) shall apply -
'(A) to transfers after the date of the enactment of this Act
(July 18, 1984), and
'(B) to transfers on or before such date of enactment if the
property to be received in the exchange is not received before
January 1, 1987.
In the case of any transfer on or before the date of the enactment
of this Act which the taxpayer treated as part of a like-kind
exchange, the period for assessing any deficiency of tax
attributable to the amendment made by subsection (a) (amending this
section) shall not expire before January 1, 1988.
'(4) Special rule where property identified in binding contract.
- If the property to be received in the exchange is identified in a
binding contract in effect on June 13, 1984, and at all times
thereafter before the transfer, paragraph (3) shall be applied -
'(A) by substituting 'January 1, 1989' for 'January 1, 1987',
and
'(B) by substituting 'January 1, 1990' for 'January 1, 1988'.
'(5) Special rule for like-kind exchange of partnership
interests. - Paragraph (2)(D) of section 1031(a) of the Internal
Revenue Code of 1986 (as amended by subsection (a)) shall not apply
to any exchange of an interest as general partner pursuant to a
plan of reorganization of ownership interest under a contract which
took effect on March 29, 1984, and which was executed on or before
March 31, 1984, but only if all the exchanges contemplated by the
reorganization plan are completed on or before December 31, 1984.'
Section 212(c)(2) of Pub. L. 91-172, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: 'The amendment made by paragraph (1) (amending this section) shall apply to taxable years to which the Internal Revenue Code of 1986 (formerly I.R.C. 1954) applies.'
Amendment by Pub. L. 86-346 effective for taxable years ending after Sept. 22, 1959, see section 203 of Pub. L. 86-346, set out as an Effective Date note under section 1037 of this title.
Amendment by Pub. L. 85-866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 1(c)(1) of Pub. L. 85-866, set out as a note under section 165 of this title.
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99-514, as amended, set out as a note under section 401 of this title.
Stock for stock of same corporation, see section 1036 of this title.
This section is referred to in sections 83, 424, 453, 454, 704, 857, 1035, 1036, 1037, 1060, 1245, 1250, 2032A of this title.