Learn about the two provisions within the Internal Revenue Code that allow taxpayers to defer recognition of immediate taxable gain in the year of sale: installment sales and like-kind exchanges. Also, discuss recent proposals which could impact the future of these two provisions.
DESIGNED FOR
CPAs who either represent or work for entities that own real property
BENEFITS
- Learn when and how to utilize the provisions of IRC Section 453 in order to defer recognizing gain on the sale of real property via installment sales
- Learn when and how to utilize the provisions of IRC Section 1031 in order to defer recognizing gain on the sale of real property via a like-kind exchange
HIGHLIGHTS
When real property is sold for a gain, we always try to find ways to defer recognizing income so it won’t be necessary to send a check to Uncle Sam. Knowing how and when to utilize installment sales and like-kind exchanges makes the CPA very valuable to either their client or the entity they work for. The following topics will be covered:
- How the IRC defines an installment sale under Section 453
- When a taxpayer can utilize the provisions of IRC Section 453
- When a taxpayer should utilize the provisions of an installment sale and when should it be avoided
- How the issue of a “dealer” versus a “non-dealer” impact the use of the installment sale method
- Reporting an installment sale when related parties are involved
- Calculating an installment sale
- How the Tax Cuts and Jobs Act has impacted the use of the installment sale method
- A like-kind exchange as defined by IRC Section 1031
- When a taxpayer can utilize the provisions of IRC Section 1031
- The types of real property are eligible for like-kind exchange treatment and the types that are not
- What “boot” and how it impacts the like-kind exchange deferral?
- Calculating a like-kind exchange including any taxable portion
- How the Tax Cuts and Jobs Act has impacted the use of like-kind exchanges
- Recent changes to like-kind exchanges as the result of IRS final regulations
- Changes that may be on the horizon regarding like-kind exchanges
COURSE LEVEL
Intermediate
PREREQUISITES
A basic understanding of the provisions for recognizing gain or loss on the sale of real property
ADVANCE PREPARATION
None