8824 Like-Kind Exchanges

2007 Form 8824
Like-Kind Exchanges
Purpose:

This is the first circulated proof of the 2007 Form 8824,
Like-Kind Exchanges. Major changes are discussed below.

TPCC Meeting:

None scheduled, but will be if requested.

Prior Revision:

The 2006 Form 8824 can be viewed by clicking on the
following link:
http://www.irs.gov/pub/irs-pdf/f8824.pdf.

Other Products:

Circulations of draft tax forms and instructions are posted at
http://taxforms.web.irs.gov/draft_products.html. Draft publications
are not available.

Comments:

Please call, mail, e-mail or fax comments by June 15, 2007.

Major Changes
2007 Form 8824
● Added information regarding conflict-of-interest sales by judicial officers to Part IV
of the form and on pages 3 and 5 of the instructions (PL 109-432, sec 418). Also
added a What’s New item.
● Made two style guide changes to Part III of the form.
● Clarified a line reference on page 3 of the instructions.
● Updated years as needed.

FROM: Chris

Bohanan

SE:W:CAR:MP:T:I:P
Individual Publications
Section

EMAIL:
[email protected]

PHONE:
202-622-3178

FAX:
202-622-5022

ROOM:
6423-09

DATE:
May 16, 2007

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I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
FORM 8824, PAGE 1 of 6.
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
1
FLAT SIZE: 216 mm (8 ⁄ 2 ") 3 279 mm (11")
PERFORATE: (NONE)

8824

Department of the Treasury
Internal Revenue Service

Name(s) shown on tax return

Part I

Date

Signature

O.K. to print

DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form

Action

Revised proofs
requested

OMB No. 1545-1190

Like-Kind Exchanges

2007

(and section 1043 conflict-of-interest sales)

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©

Attachment
Sequence No.

Attach to your tax return.

109

Identifying number

Information on the Like-Kind Exchange

1

Note: If the property described on line 1 or line 2 is real or personal property located outside the United States, indicate the country.
Description of like-kind property given up ©

2

Description of like-kind property received

3

Date like-kind property given up was originally acquired (month, day, year)

3

/

/

4

Date you actually transferred your property to other party (month, day, year)

4

/

/

5

Date like-kind property you received was identified by written notice to another party (month,
day, year). See instructions for 45-day written notice requirement

5

/

/

6

Date you actually received the like-kind property from other party (month, day, year). See instructions

6

/

/

7

Was the exchange of the property given up or received made with a related party, either directly or indirectly
(such as through an intermediary)? See instructions. If “Yes,” complete Part II. If “No,” go to Part III

Part II
8

©

Yes

No

Related Party Exchange Information

Name of related party

Relationship to you

Related party’s identifying number

Address (no., street, and apt., room, or suite no., city or town, state, and ZIP code)

9

10

During this tax year (and before the date that is 2 years after the last transfer of property that was part of the
exchange), did the related party directly or indirectly (such as through an intermediary) sell or dispose of any
part of the like-kind property received from you in the exchange?

Yes

No

During this tax year (and before the date that is 2 years after the last transfer of property that was part of the
exchange), did you sell or dispose of any part of the like-kind property you received?

Yes

No

If both lines 9 and 10 are “No” and this is the year of the exchange, go to Part III. If both lines 9 and 10 are “No” and this is not the
year of the exchange, stop here. If either line 9 or line 10 is “Yes,” complete Part III and report on this year’s tax return the deferred
gain or (loss) from line 24 unless one of the exceptions on line 11 applies.

11

If one of the exceptions below applies to the disposition, check the applicable box:

a

The disposition was after the death of either of the related parties.

b

The disposition was an involuntary conversion, and the threat of conversion occurred after the exchange.

c

You can establish to the satisfaction of the IRS that neither the exchange nor the disposition had tax avoidance as its
principal purpose. If this box is checked, attach an explanation (see instructions).

For Paperwork Reduction Act Notice, see page 5.

Cat. No. 12311A

Form

8824

(2007)

1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTER
FORM 8824, PAGE 2 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
1
FLAT SIZE: 216 mm (8 ⁄ 2 ") 3 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8824 (2007)

Page

Name(s) shown on tax return. Do not enter name and social security number if shown on other side.

Part III

2

Your social security number

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Realized Gain or (Loss), Recognized Gain, and Basis of Like-Kind Property Received

Caution: If you transferred and received (a) more than one group of like-kind properties or (b) cash or other (not like-kind) property,
see Reporting of multi-asset exchanges in the instructions.
12
13
14

15
16
17
18
19
20
21
22
23
24
25

Note: Complete lines 12 through 14 only if you gave up property that was not like-kind. Otherwise, go to line 15.
12
Fair market value (FMV) of other property given up
13
Adjusted basis of other property given up
Gain or (loss) recognized on other property given up. Subtract line 13 from line 12. Report the
gain or (loss) in the same manner as if the exchange had been a sale
Caution: If the property given up was used previously or partly as a home, see Property used
as home in the instructions.
Cash received, FMV of other property received, plus net liabilities assumed by other party, reduced
(but not below zero) by any exchange expenses you incurred (see instructions)
FMV of like-kind property you received
Add lines 15 and 16
Adjusted basis of like-kind property you gave up, net amounts paid to other party, plus any
exchange expenses not used on line 15 (see instructions)
Realized gain or (loss). Subtract line 18 from line 17
Enter the smaller of line 15 or line 19, but not less than zero
Ordinary income under recapture rules. Enter here and on Form 4797, line 16 (see instructions)
Subtract line 21 from line 20. If zero or less, enter -0-. If more than zero, enter here and on Schedule
D or Form 4797, unless the installment method applies (see instructions)
Recognized gain. Add lines 21 and 22
Deferred gain or (loss). Subtract line 23 from line 19. If a related party exchange, see instructions
Basis of like-kind property received. Subtract line 15 from the sum of lines 18 and 23

Part IV

14

15
16
17
18
19
20
21
22
23
24
25

Deferral of Gain From Section 1043 Conflict-of-Interest Sales

Note: This part is to be used only by officers or employees of the executive branch of the Federal Government or judicial
officers of the Federal Government for reporting nonrecognition of gain under section 1043 on the sale of property to comply
with the conflict-of-interest requirements. This part can be used only if the cost of the replacement property is more than the
basis of the divested property.
26

Enter the number from the upper right corner of your certificate of divestiture. (Do not attach a
©
copy of your certificate. Keep the certificate with your records.)

–

©

27

Description of divested property

28

Description of replacement property

29

Date divested property was sold (month, day, year)

30

Sales price of divested property (see instructions)

30

31

Basis of divested property

31

32

Realized gain. Subtract line 31 from line 30

33

Cost of replacement property purchased within 60 days after date
of sale

34

Subtract line 33 from line 30. If zero or less, enter -0-

34

35
36

Ordinary income under recapture rules. Enter here and on Form 4797, line 10 (see instructions)
Subtract line 35 from line 34. If zero or less, enter -0-. If more than zero, enter here and on
Schedule D or Form 4797 (see instructions)

35

37

Deferred gain. Subtract the sum of lines 35 and 36 from line 32

37

38

Basis of replacement property. Subtract line 37 from line 33

38

©

29

/

/

32
33

36

Form

8824

(2007)

1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTER
FORM 8824, PAGE 3 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
1
FLAT SIZE: 216 mm (8 ⁄ 2 ") 3 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8824 (2007)

General Instructions
Section references are to the Internal
Revenue Code unless otherwise noted.

What’s New
Judicial officers. If you are a judicial
officer of the Federal Government and you
sell property at a gain after December 20,
2006, according to a certificate of
diverstiture issued by the Judicial
Conference of the United States (or its
designee) and purchase replacement
property (permitted property) within 60
days after the sale, you can elect to defer
part or all of the realized gain. This election
also applies to sales by certain persons
related to the judicial officer and to sales
by trustees of certain trusts in which the
judicial officer or related person has a
beneficial interest. Use Part IV to report
these sales.

Purpose of Form
Use Parts I, II, and III of Form 8824 to
report each exchange of business or
investment property for property of a like
kind. Certain members of the executive
branch of the Federal Government and
judicial officers of the Federal Government
use Part IV to elect to defer gain on
conflict-of-interest sales. Judicial officers of
the Federal Government are the following:
1. Chief Justice of the United States.
2. Associate Justices of the Supreme Court.
3. Judges of the:
a. Untied States courts of appeals,
b. United States district courts,
including the district courts in Guam, the
Northern Mariana Islands, and the Virgin
Islands,
c. Court of Appeals for the Federal Circuit,
d. Court of International Trade,
e. Tax Court,
f. Court of Federal Claims,
g. Court of Appeals for Veterans Claims,
h. United States Court of Appeals for
the Armed Forces, and
i. Any court created by Act of
Congress, the judges of which are entitled
to hold office during good behavior.
Multiple exchanges. If you made more
than one like-kind exchange, you may file
only a summary Form 8824 and attach
your own statement showing all the
information requested on Form 8824 for
each exchange. Include your name and
identifying number at the top of each page
of the statement. On the summary Form
8824, enter only your name and identifying
number, “Summary” on line 1, the total
recognized gain from all exchanges on line
23, and the total basis of all like-kind
property received on line 25.

When To File
If during the current tax year you
transferred property to another party in a
like-kind exchange, you must file Form
8824 with your tax return for that year.
Also file Form 8824 for the 2 years
following the year of a related party
exchange (see the instructions for line 7 on
page 4).

Page

Like-Kind Exchanges

Exchanges using a qualified exchange
accommodation arrangement (QEAA). If
property is transferred to an exchange
accommodation titleholder (EAT) and held
in a QEAA, the EAT may be treated as the
beneficial owner of the property, the
property transferred from the EAT to you
may be treated as property you received in
an exchange, and the property you
transferred to the EAT may be treated as
property you gave up in an exchange. This
may be true even if the property you are to
receive is transferred to the EAT before
you transfer the property you are giving up.
However, the property transferred to you
cannot be treated as property received in
an exchange if you previously owned it
within 180 days of its transfer to the EAT.
For details, see Rev. Proc. 2000-37 as
modified by Rev. Proc. 2004-51. Rev.
Proc. 2000-37 is on page 308 of Internal
Revenue Bulletin 2000-40 at
www.irs.gov/pub/irs-irbs/irb00-40.pdf. Rev.
Proc. 2004-51 is on page 294 of Internal
Revenue Bulletin 2004-33 at
www.irs.gov/irb/2004-33_IRB/ar13.html.
Property used as home. If the property
given up was owned and used as your
home during the 5-year period ending on
the date of the exchange, you may be able
to exclude part or all of any gain figured on
Form 8824. For details on the exclusion
(including how to figure the amount of the
exclusion), see Pub. 523, Selling Your
Home. Fill out Form 8824 according to its
instructions, with these exceptions:
1. Subtract line 18 from line 17. Subtract
the amount of the exclusion from the
result. Enter that result on line 19. On the
dotted line next to line 19, enter “Section
121 exclusion” and the amount of the
exclusion.
2. On line 20, enter the smaller of:
a. Line 15 minus the exclusion, or
b. Line 19.
Do not enter less than zero.
3. Subtract line 15 from the sum of lines
18 and 23. Add the amount of your
exclusion to the result. Enter that sum on
line 25.
Property used partly as home. If the
property given up was used partly as a
home, you will need to use two separate
Forms 8824 as worksheets—one for the
part of the property used as a home and
one for the part used for business or
investment. Fill out only lines 15 through
25 of each worksheet Form 8824. On the
worksheet Form 8824 for the part of the
property used as a home, follow steps (1)
through (3) above, except that instead of
following step (2), enter the amount from
line 19 on line 20. On the worksheet Form
8824 for the part of the property used for
business or investment, follow steps (1)
through (3) above only if you can exclude
at least part of any gain from the exchange
of that part of the property; otherwise,
complete the form according to its
instructions. Enter the combined amounts
from lines 15 through 25 of both worksheet
Forms 8824 on the Form 8824 you file. Do
not file either worksheet Form 8824.

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Generally, if you exchange business or
investment property solely for business or
investment property of a like kind, section
1031 provides that no gain or loss is
recognized. If, as part of the exchange,
you also receive other (not like-kind)
property or money, gain is recognized to
the extent of the other property and money
received, but a loss is not recognized.
Section 1031 does not apply to
exchanges of inventory, stocks, bonds,
notes, other securities or evidence of
indebtedness, or certain other assets. See
section 1031(a)(2). In addition, section 1031
does not apply to certain exchanges
involving tax-exempt use property subject
to a lease. See section 470(e)(4).
Like-kind property. Properties are of like
kind if they are of the same nature or
character, even if they differ in grade or
quality. Personal properties of a like class
are like-kind properties. However, livestock
of different sexes are not like-kind
properties. Also, personal property used
predominantly in the United States and
personal property used predominantly
outside the United States are not like-kind
properties. See Pub. 544, Sales and Other
Dispositions of Assets, for more details.
Real properties generally are of like kind,
regardless of whether they are improved or
unimproved. However, real property in the
United States and real property outside the
United States are not like-kind properties.

Deferred exchanges. A deferred exchange
occurs when the property received in the
exchange is received after the transfer of
the property given up. For a deferred
exchange to qualify as like-kind, you must
comply with the 45-day written notice and
receipt requirements explained in the
instructions for line 5 on page 4 and line 6
on page 4.
Multi-asset exchanges. A multi-asset
exchange involves the transfer and receipt
of more than one group of like-kind
properties. For example, an exchange of
land, vehicles, and cash for land and
vehicles is a multi-asset exchange. An
exchange of land, vehicles, and cash for
land only is not a multi-asset exchange.
The transfer or receipt of multiple
properties within one like-kind group is
also a multi-asset exchange. Special rules
apply when figuring the amount of gain
recognized and your basis in properties
received in a multi-asset exchange. For
details, see Regulations section 1.1031(j)-1.
Reporting of multi-asset exchanges. If
you transferred and received (a) more than
one group of like-kind properties or
(b) cash or other (not like-kind) property,
do not complete lines 12 through 18 of
Form 8824. Instead, attach your own
statement showing how you figured the
realized and recognized gain, and enter the
correct amount on lines 19 through 25.
Report any recognized gains on Schedule
D; Form 4797, Sales of Business Property;
or Form 6252, Installment Sale Income,
whichever applies.

3

1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTER
FORM 8824, PAGE 4 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
1
FLAT SIZE: 216 mm (8 ⁄ 2 ") 3 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8824 (2007)

More information. For details, see Rev.
Proc. 2005-14 on page 528 of Internal
Revenue Bulletin 2005-7 at
www.irs.gov/irb/2005-07_IRB/ar10.html.
Additional information. For more
information on like-kind exchanges, see
section 1031 and its regulations and Pub.
544.

Specific Instructions
Lines 1 and 2. For real property, enter the
address and type of property. For personal
property, enter a short description. For
property located outside the United States,
include the country.
Line 5. Enter on line 5 the date of the
written notice that identifies the like-kind
property you received in a deferred
exchange. To comply with the 45-day
written notice requirement, the following
conditions must be met.
1. The like-kind property you receive in a
deferred exchange must be designated in
writing as replacement property either in a
document you signed or in a written
agreement signed by all parties to the
exchange.
2. The document or agreement must
describe the replacement property in a
clear and recognizable manner. Real
property should be described using a legal
description, street address, or
distinguishable name (for example,
“Mayfair Apartment Building”).
3. No later than 45 days after the date
you transferred the property you gave up:
a. You must send, fax, or hand deliver
the document you signed to the person
required to transfer the replacement
property to you (including a disqualified
person) or to another person involved in
the exchange (other than a disqualified
person), or
b. All parties to the exchange must sign
the written agreement designating the
replacement property.
Generally, a disqualified person is either
your agent at the time of the transaction or
a person related to you. For more details,
see Regulations section 1.1031(k)-1(k).
Note. If you received the replacement
property before the end of the 45-day
period, you automatically are treated as
having met the 45-day written notice
requirement. In this case, enter on line 5
the date you received the replacement
property.
Line 6. Enter on line 6 the date you
received the like-kind property from the
other party.
The property must be received by the
earlier of the following dates.
● The 180th day after the date you
transferred the property given up in the
exchange.
● The due date (including extensions) of
your tax return for the year in which you
transferred the property given up.

Page

Line 7. Special rules apply to like-kind
exchanges made with related parties,
either directly or indirectly. A related party
includes your spouse, child, grandchild,
parent, grandparent, brother, sister, or a
related corporation, S corporation,
partnership, trust, or estate. See section
1031(f).
An exchange made indirectly with a
related party includes:
● An exchange made with a related party
through an intermediary (such as a
qualified intermediary or an exchange
accommodation titleholder, as defined in
Pub. 544), or
● An exchange made by a disregarded
entity (such as a single member limited
liability company) if you or a related party
owned that entity.
If the related party (either directly or
indirectly) or you dispose of the property
received in an exchange before the date
that is 2 years after the last transfer of
property from the exchange, the deferred
gain or (loss) from line 24 must be reported
on your return for the year of disposition
(unless an exception on line 11 applies).
If you are filing this form for 1 of the 2
years following the year of the exchange,
complete Parts I and II. If both lines 9 and
10 are “No,” stop.
If either line 9 or line 10 is “Yes,” and an
exception on line 11 applies, check the
applicable box on line 11, attach any
required explanation, and stop. If no line
11 exceptions apply, complete Part III.
Report the deferred gain or (loss) from line
24 on this year’s tax return as if the exchange
had been a sale.
An exchange structured to avoid the
related party rules is not a like-kind
exchange. Do not report it on Form 8824.
Instead, you should report the disposition of
the property given up as if the exchange
had been a sale. See section 1031(f)(4).
Such an exchange includes the transfer of
property you gave up to a qualifed
intermediary in exchange for property you
received that was formerly owned by a
related party if the related party received
cash or other (not like-kind) property for the
property you received, and you used the
qualified intermediary to avoid the
application of the related party rules. See
Rev. Rul. 2002-83 for more details. You can
find Rev. Rul. 2002-83 on page 927 of
Internal Revenue Bulletin 2002-49 at
www.irs.gov/pub/irs-irbs/irb02-49.pdf.

● An exchange of undivided interests in
different properties that results in each
related party holding either the entire
interest in a single property or a larger
undivided interest in any of the properties.
Lines 12, 13, and 14. If you gave up other
property in addition to the like-kind
property, enter the fair market value (FMV)
and the adjusted basis of the other
property on lines 12 and 13, respectively.
The gain or (loss) from this property is
figured on line 14 and must be reported on
your return. Report gain or (loss) as if the
exchange were a sale.
Line 15. Include on line 15 the sum of:
● Any cash paid to you by the other party,
● The FMV of other (not like-kind) property
you received, if any, and
● Net liabilities assumed by the other
party—the excess, if any, of liabilities
(including mortgages) assumed by the
other party over the total of (a) any
liabilities you assumed, (b) cash you paid
to the other party, and (c) the FMV of the
other (not like-kind) property you gave up.
Reduce the sum of the above amounts
(but not below zero) by any exchange
expenses you incurred. See the example
on this page.
The following rules apply in determining
the amount of liability treated as assumed.
● A recourse liability (or portion thereof) is
treated as assumed by the party receiving
the property if that party has agreed to and
is expected to satisfy the liability (or
portion thereof). It does not matter whether
the party transferring the property has
been relieved of the liability.
● A nonrecourse liability generally is
treated as assumed by the party receiving
the property subject to the liability.
However, if an owner of other assets
subject to the same liability agrees with the
party receiving the property to, and is
expected to, satisfy part or all of the
liability, the amount treated as assumed is
reduced by the smaller of (a) the amount of
the liability that the owner of the other
assets has agreed to and is expected to
satisfy or (b) the FMV of those other
assets.
Line 18. Include on line 18 the sum of:
● The adjusted basis of the like-kind
property you gave up,
● Exchange expenses, if any (except for
expenses used to reduce the amount
reported on line 15), and
● Net amount paid to the other party—the
excess, if any, of the total of (a) any
liabilities you assumed, (b) cash you paid
to the other party, and (c) the FMV of the
other (not like-kind) property you gave up
over any liabilities assumed by the other
party.
See Regulations section 1.1031(d)-2 and
the following example for figuring amounts
to enter on lines 15 and 18.
Example. A owns an apartment house
with an FMV of $220,000, an adjusted
basis of $100,000, and subject to a
mortgage of $80,000. B owns an

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Line 11c. If you believe that you can
establish to the satisfaction of the IRS that
tax avoidance was not a principal purpose
of both the exchange and the disposition,
attach an explanation. Generally, tax
avoidance will not be seen as a principal
purpose in the case of:
● A disposition of property in a
nonrecognition transaction,
● An exchange in which the related parties
derive no tax advantage from the shifting
of basis between the exchanged
properties, or

4

1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTER
FORM 8824, PAGE 5 of 6. (PAGE 6 IS BLANK).
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
1
FLAT SIZE: 216 mm (8 ⁄ 2 ") 3 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8824 (2007)

apartment house with an FMV of $250,000,
an adjusted basis of $175,000, and subject
to a mortgage of $150,000.
A transfers his apartment house to B
and receives in exchange B’s apartment
house plus $40,000 cash. A assumes the
mortgage on the apartment house received
from B, and B assumes the mortgage on
the apartment house received from A.
A enters on line 15 only the $40,000
cash received from B. The $80,000 of
liabilities assumed by B is not included
because it does not exceed the $150,000
of liabilities A assumed. A enters $170,000
on line 18—the $100,000 adjusted basis,
plus the $70,000 excess of the liabilities A
assumed over the liabilities assumed by B
($150,000 - $80,000).
B enters $30,000 on line 15—the excess
of the $150,000 of liabilities assumed by A
over the total ($120,000) of the $80,000 of
liabilities B assumed and the $40,000 cash
B paid. B enters on line 18 only the
adjusted basis of $175,000 because the
total of the $80,000 of liabilities B assumed
and the $40,000 cash B paid does not
exceed the $150,000 of liabilities assumed
by A.
Line 21. If you disposed of section 1245,
1250, 1252, 1254, or 1255 property (see
the instructions for Part III of Form 4797),
you may be required to recapture as
ordinary income part or all of the realized
gain (line 19). Figure the amount to enter
on line 21 as follows:
Section 1245 property. Enter the smaller
of:
1. The total adjustments for deductions
(whether for the same or other property)
allowed or allowable to you or any other
person for depreciation or amortization (up
to the amount of gain shown on line 19), or
2. The gain shown on line 20, if any, plus
the FMV of non-section 1245 like-kind
property received.
Section 1250 property. Enter the smaller
of:
1. The gain you would have had to
report as ordinary income because of
additional depreciation if you had sold the
property (see the Form 4797 instructions
for line 26), or
2. The larger of:
a. The gain shown on line 20, if any, or
b. The excess, if any, of the gain in
item (1) above over the FMV of the section
1250 property received.
Section 1252, 1254, and 1255 property.
The rules for these types of property are
similar to those for section 1245 property.
See Regulations section 1.1252-2(d) and
Temporary Regulations section
16A.1255-2(c) for details. If the installment
method applies to this exchange:
1. See section 453(f)(6) to determine the
installment sale income taxable for this
year and report it on Form 6252.
2. Enter on Form 6252, line 25 or 36, the
section 1252, 1254, or 1255 recapture
amount you figured on Form 8824, line 21.
Do not enter more than the amount shown
on Form 6252, line 24 or 35.

Page

3. Also enter this amount on Form 4797,
line 15.
4. If all the ordinary income is not
recaptured this year, report in future years
on Form 6252 the ordinary income up to the
taxable installment sale income, until it is all
reported.
Line 22. Report a gain from the exchange
of property used in a trade or business
(and other noncapital assets) on Form
4797, line 5 or line 16. Report a gain from
the exchange of capital assets according
to the Schedule D instructions for your
return. Be sure to use the date of the
exchange as the date for reporting the
gain. If the installment method applies to
this exchange, see section 453(f)(6) to
determine the installment sale income
taxable for this year and report it on Form
6252.
Line 24. If line 19 is a loss, enter it on
line 24. Otherwise, subtract the amount on
line 23 from the amount on line 19 and
enter the result. For exchanges with related
parties, see the instructions for line 7 on
page 4.

5

replacement property, reduce your basis in
the replacement property in the order you
acquired it.
Line 30. Enter the amount you received
from the sale of the divested property,
minus any selling expenses.
Line 35. Follow these steps to determine
the amount to enter.
1. Use Part III of Form 4797 as a
worksheet to figure ordinary income under
the recapture rules.
2. Enter on Form 8824, line 35, the
amount from Form 4797, line 31. Do not
attach the Form 4797 used as a worksheet
to your return.
3. Report the amount from line 35 on
Form 4797, line 10, column (g). In column
(a), write “From Form 8824, line 35.” Do
not complete columns (b) through (f).
Line 36. If you sold a capital asset, enter
any capital gain from line 36 on Schedule
D. If you sold property used in a trade or
business (or any other asset for which the
gain is treated as ordinary income), report
the gain on Form 4797, line 2 or line 10,
column (g). In column (a), write “From Form
8824, line 36.” Do not complete columns
(b) through (f).

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a
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f
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Line 25. The amount on line 25 is your
basis in the like-kind property you received
in the exchange. Your basis in other
property received in the exchange, if any, is
its FMV.

Section 1043
Conflict-of-Interest Sales
(Part IV)
If you sell property at a gain according to a
certificate of divestiture issued by the
Office of Government Ethics (OGE) or the
Judicial Conference of the United States
(or its designee) and purchase replacement
property (permitted property), you can elect
to defer part or all of the realized gain. You
must recognize gain on the sale only to the
extent that the amount realized on the sale
is more than the cost of replacement
property purchased within 60 days after
the sale. (You also must recognize any
ordinary income recapture.) Permitted
property is any obligation of the United
States or any diversified investment fund
approved by the OGE.
If the property you sold was
stock you acquired by exercising
a statutory stock option, you may
be treated as meeting the
holding periods that apply to such stock,
regardless of how long you actually held the
stock. This may benefit you if you do not
defer your entire gain, because it may allow
you to treat the gain as a capital gain
instead of ordinary income. For details, see
section 421(d) or Pub. 525.
Complete Part IV of Form 8824 only if the
cost of the replacement property is more
than the basis of the divested property and
you elect to defer the gain. Otherwise,
report the sale on Schedule D or Form
4797, whichever applies.
Your basis in the replacement property is
reduced by the amount of the deferred gain.
If you made more than one purchase of

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