 |
|
|
|
A 1031 tax deferred exchange allows investors to defer capital gain on the
purchase and sale of like kind personal property, such as aircraft, automobiles,
and business equipment. With respect to personal property exchanges the
like kind requirements are narrower than those for real property exchanges.
Generally, to qualify as "like kind" the relinquished and replacement
depreciable personal property must be in the same General Asset Class or
Product Class. There are 13 General Asset Classes:
- Office furniture, fixtures and equipment
- Information systems (computers and peripheral equipment)
- Data handling equipment, except computers
- Airplanes, except those used commercially, and helicopters
- Automobiles and taxis
- Buses
- Light general purpose trucks
- Heavy general purpose trucks
- Railroad cars and locomotives, except those
owned by railroad transportation companies
- Tractor units for use over-the-road
- Trailers and trailer mounted containers
- Vessels, barges, tugs and similar water-transportation equipment,
except those used in marine construction
- Industrial steam and electric generation and/or distribution
systems
Although there are no asset classes for non-depreciable tangible property
and intangible personal property, such as copyrights and franchise agreements,
such property may be eligible for tax deferred treatment when exchanged
for like kind property, i.e., property of the same nature and character.
Unfortunately, goodwill of a business is not considered like kind to goodwill
of another business, even where the businesses are the same.
Under IRC Section 1031 the following property is not
eligible for tax deferred status:
- Stock in trade or other property held primarily for sale
- Stocks, bonds, or notes
- Other securities or evidence of indebtedness or interest
- Interest in a partnership
- Certificates of trust or beneficial interests
|
|
![](/images/clear.gif"){kind=spacer}
