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Nontaxable dispositions

TCP Chapter 16 · Area IV · Blueprint IV.A

Not every disposition is taxed right away. A like-kind exchange of real estate or the replacement of property lost to fire or condemnation can defer gain, but only if the rules are followed exactly, and the deferral lives on in a lower basis. The Blueprint asks you to calculate realized, recognized and deferred gain and the new basis in like-kind exchanges and involuntary conversions, and to review transactions and documents to decide whether they are taxable. Tessa and Leo work with Rafael Ortiz, a real estate investor, and Bayside Printing, Inc., whose building burned down. Figures are for 2026.

In this chapter

1. Like-kind exchanges: the basics
2. Boot and liabilities in an exchange
3. Deferred exchanges and related parties
4. Involuntary conversions
5. Taxable or nontaxable? Other nonrecognition rules
6. Reviewing exchange documentation and Form 8824

This chapter has 6 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• §1031 like-kind exchanges, timing rules, boot and replacement basis
• §1033 involuntary conversions
• reviewing exchanges

Chapter 15: Tax planning for partnerships · Chapter 17: Character of gains and losses and installment sales