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Basis adjustments after like-kind exchange

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. You say that you must adjust basis for a new business car on a trade-in. Is that also true for real estate exchanges? A.G.

A. Yes, the basic rules are the same for like-kind exchanges of real estate under Section 1031. Thus, the basis of the real estate property you acquire is equal to the basis of the old property, adjusted in value for any other “boot” given or received in the exchange. For instance, boot might include forgiveness of a mortgage or cash proceeds used to “even out the deal.”


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