Publication Date - July 2006

NOTE: This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date.

Chapter 2/ Table of Contents / Chapter 4
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Chapter Three - Basis on Farm Assets

• Introduction
• Like Kind Exchanges
• Gifted Property
• Inherited Property
• Farm Sale
• Cost Recovery - Depreciation and Depletion

Like Kind Exchanges

Basis of property acquired through a like kind exchange is equal to the basis of the property exchanged. When cash is paid in a non-taxable exchange, the basis of the property acquired is the basis of the property traded plus the cash difference paid. An exchange could involve more than one kind of property and basis must be divided among the properties received in the exchange. The basis of any unlike property is its FMV on the date of exchange. The balance of basis is then allocated to the like-kind exchange.

See the new regulations issued under IRC § 1031 for details regarding meeting the like kind requirements, identifying and exchanging property rules.