Beware if you are closing after October 17th!
Form #8824, Like Kind Exchange, is filed to reflect the exchange on the Exchanger’s tax return in the year the transaction began (i.e. the year the whichever is earlier. relinquished property was sold to a buyer.) Form #8824 requires the Exchanger to provide the following information:
Part I Information on the Like Kind Exchange
Part II Related Party Exchange Information
Part III Realized Gain or (Loss), Recognized Gain, Basis
Part IV Deferral of Gain from Section 1043 Sales
Form #4797 or Schedule D is filed to report the taxable gain. The gain must be allocated between capital gain, ordinary income depreciation recapture, Section 1231 gain and unrecaptured Section 1250 gain.
Form #6252, Installment Sale Income, must be filed if the Exchanger carries back a note to a buyer on the sale of the relinquished and is able to report the taxable gain under the installment sale rules.
This is a brief summary. Every Exchanger should consult with a tax advisor to review their specific situation and tax filing requirements.
An Exchanger has to complete their exchange within 180 calendar days, or the date their tax return is due – If an Exchanger closes an exchange:
Then the Exchanger must:
File an extension by April 15, using Form #4868, which would extend the date the Exchanger’s tax return is due until August 15 of that year.
If the tax extension is not filed by their tax filing date, the Exchanger’s Exchange Period” is shortened to the actual date their tax return is due and filed.