Internal Revenue Service Form 8824, “Like-Kind Exchanges,” is the two-page form to report gain or loss on a 1031 exchange. The form is filed along with the taxpayer’s federal income tax return to support their intent to initiate and secure the 1031 tax deferral for gain or loss from property held for and replaced by property held for productive use in a trade, business or for investment. When exchanging real estate, the title or closing attorney submits a 1099 to the Internal Revenue Service and provides a copy to the taxpayer. The 1099 reflects the gross sales amount received for the real property. Form 8824 represents the taxpayer’s reporting on how those funds were utilized.
Form 8824 Part I
In Part I, information asked on the exchange includes:
- Description of the relinquished and the replacement property,
- Date the relinquished property was acquired and transferred to other party,
- Date the replacement property was formally identified,
- Date replacement property was received, and
- Whether or not a related party was involved directly or indirectly through a qualified intermediary with a related party including your spouse, brother or sister, parent, grandparent, child, grandchild, or related corporation, S corporation, partnership, trust or estate
Do not report the 1031 exchange on Form 8824 if the exchange was structured to avoid the related party rules; instead report the disposition of the property sold as if the exchange had been a sale.
Form 8824 Part II
If the 1031 exchange was with a related party, the related party’s name, relationship to you, identifying number and address are requested. To understand more about related parties, view
Form 8824 Part III
In Part III, the realized gain or loss, recognized gain and basis of the property sold and acquired are reported. If more than one exchange is completed in the taxable year, Form 8824 should be filed as a summary reflecting the total recognized gain from all the exchanges and the total tax basis for all replacement property. In addition, the taxpayer should include a statement showing individual property information for each exchange. Be sure to review Instruction to Form 8824 for further insight.
Finally, gain from the exchange is reported on Form 4797 for sales of business property or Schedule D for capital assets. Gain received from an installment loan in an exchange is provided on Form 6252. As always, seek the counsel of your CPA to understand specific taxpayer reporting requirements.
Learn ten reasons why a 1031 exchange makes sense by clicking here.
We Can Help
Atlas 1031 Exchange has been accommodating tax-deferred exchanges of all kinds for more than 17 years. We are fluent in the rules and regulations of IRC Section 1031 and able to help you navigate your exchange.
Contact us today to discuss any questions you may have. Call our office at 1-800-227-1031, email us at info@atlas1031.com, or submit your question through the online form at the top of this page.