Question

what happens on the assumption of liabilities of acquired property in a like-kind exchange? How do you determine the basis of acquired property in a like-kind exchange? Can you help me with sources

Answer 1

A like-kind property refers to two assets that are considered to be the same type, making an exchange between them tax deferrable. The two assets must be of the same type but do not need to be of the same quality to qualify as like-kind property

There are several important considerations to keep in mind with a like-kind exchange to ensure that a tax liability is not created upon sale of the first asset:

1. The asset being sold must be an investment property and cannot be a personal residence.
2. The asset being purchased with the proceeds must be similar to the asset being sold.
3. The proceeds from the sale must be used to purchase the other asset within 180 days of the sale of the first asset, although you must identify the property or asset that you are purchasing in the like-kind exchange within 45 days of the sale.