If liabilities assumed by the buyer exceed those of the seller (taxpayer), the realized gain of the seller will be recognized.
If, however, the seller assumes a greater liability than the buyer, the realized loss cannot offset any realized and recognized gain of receiving boot such as cash or other personal property considered boot.
For a non-simultaneous exchange, the taxpayer must use a Qualified Intermediary, follow guidelines of the IRS, and use the proceeds of the sale to buy more qualifying, like-kind, investment or business property.
Backdating capital gains tax
It also states that the property to be exchanged must be identified within 45 days, and received within 180 days.
1031(b) states when like-kind property and boot can be received.
United States, a contract to exchange properties in the future is practically the same as a simultaneous transfer.
This case invented the concept of the Starker exchange.
The gain is recognized to the extent of boot received.
1031(c) covers cases similar to those in 1031(b), except when the transaction results in a loss.The sale of the relinquished property and the acquisition of the replacement property do not have to be simultaneous.A non-simultaneous exchange is sometimes called a Starker Tax Deferred Exchange a type of transaction named for an investor who won a case against the Internal Revenue Service (IRS).Under Section 1031 of the United States Internal Revenue Code (26 U. In 1979, this treatment was expanded by the courts to include non-simultaneous sale and purchase of real estate, a process sometimes called a Starker exchange. § 1031), a taxpayer may defer recognition of capital gains and related Federal income tax liability on the exchange of certain types of property.The properties exchanged must be of "like kind", i.e., of the same nature or character, even if they differ in grade or quality.