8824 Like-Kind Exchanges

Form

8824

Like-Kind Exchanges

OMB No. 1545-1190

2008

(and section 1043 conflict-of-interest sales)

Department of the Treasury
Internal Revenue Service

 Attach

Attachment
Sequence No.

to your tax return.

Name(s) shown on tax return

Part I

109

Identifying number

Information on the Like-Kind Exchange

Note: If the property described on line 1 or line 2 is real or personal property located outside the United States, indicate the country.

1 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

MM/DD/YYYY

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

.

.

.

.

.

.

4

MM/DD/YYYY

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

MM/DD/YYYY

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

6

MM/DD/YYYY

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 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 sell or dispose of any part of the like-kind property received from you (or an
intermediary) in the exchange or transfer property into the exchange, directly or indirectly (such as through an
intermediary), that became your replacement property? . . . . . . . . . . . . . . . . . .

Yes

No

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 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 one of its
principal purposes. If this box is checked, attach an explanation (see instructions).

For Paperwork Reduction Act Notice, see page 4 of the instructions.

Cat. No. 12311A

Form 8824 (2008)

Page 2

Form 8824 (2008)
Name(s) shown on tax return. Do not enter name and social security number if shown on other side.

Part III

Your social security number

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.

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 . . . . . .
12
13 Adjusted basis of other property given up . . . . . . . . .
13
14 Gain or (loss) recognized on other property given up. Subtract line 13 from line 12. Report the gain
14
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.
15 Cash received, FMV of other property received, plus net liabilities assumed by other party,
15
reduced (but not below zero) by any exchange expenses you incurred (see instructions) . . .
16 FMV of like-kind property you received . . . . . . . . . . . . . . . . . . . .
16
17 Add lines 15 and 16 . . . . . . . . . . . . . . . . . . . . . . . . . .
17
18 Adjusted basis of like-kind property you gave up, net amounts paid to other party, plus any
18
exchange expenses not used on line 15 (see instructions) . . . . . . . . . . . . .
19 Realized gain or (loss). Subtract line 18 from line 17 . . . . . . . . . . . . . . .
19
20 Enter the smaller of line 15 or line 19, but not less than zero . . . . . . . . . . . . .
20
21 Ordinary income under recapture rules. Enter here and on Form 4797, line 16 (see instructions) . . .
21
22 Subtract line 21 from line 20. If zero or less, enter -0-. If more than zero, enter here and on
22
Schedule D or Form 4797, unless the installment method applies (see instructions) . . . . .
23 Recognized gain. Add lines 21 and 22 . . . . . . . . . . . . . . . . . . .
23
24 Deferred gain or (loss). Subtract line 23 from line 19. If a related party exchange, see instructions . .
24
25 Basis of like-kind property received. Subtract line 15 from the sum of lines 18 and 23 . . .
25

Part IV

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 (including certain spouses, minor or dependent children, and trustees as described in section 1043)
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- .

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

29

.

.

.

.

.

.

.

32

.

.

.

.

.

.

.

34

33
.

35 Ordinary income under recapture rules. Enter here and on Form 4797, line 10 (see instructions) .
36 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

.

MM/DD/YYYY

36

Form 8824 (2008)

PAGER/SGML
Page 1 of 4

Userid: ________
DTD INSTR04
Leadpct: 0% Pt. size: 9
Fileid: C:\Documents and Settings\d4rfb\Desktop\I8824.sgm

Instructions for Form 8824

❏ Draft
(Init. & date)

❏

Ok to Print

10:16 - 6-JAN-2009

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

2008

Department of the Treasury
Internal Revenue Service

Instructions for Form 8824
Like-Kind Exchanges
(and section 1043 conflict-of-interest sales)
Section references are to the Internal
Revenue Code unless otherwise noted.

What’s New
Exchange of stock in a mutual ditch,
reservoir, or irrigation company.
Beginning with exchanges completed
after May 22, 2008, the exchange of stock
in a mutual ditch, reservoir, or irrigation
company may qualify for the
nonrecognition of gain or loss under
section 1031. See Exchange of stock in a
mutual ditch, reservoir, or irrigation
company, on page 2.

General Instructions
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. United 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 can 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 2).

Like-Kind Exchanges
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
Cat. No. 12597K

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 and line 6 on page 2.
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.
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

Page 2 of 4

Instructions for Form 8824

10:16 - 6-JAN-2009

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

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.
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.
Exchange of stock in a mutual ditch,
reservoir, or irrigation company.
Beginning with exchanges completed
after May 22, 2008, the exchange of stock
in a mutual ditch, reservoir, or irrigation
company may qualify for the
nonrecognition of gain or loss under
section 1031.
The nonrecognition of gain or loss on
the exchange may apply if, at the time of
the exchange:
1. The company is a section
501(c)(12)(A) organization (determined
without regard to the percentage of
income collected from members for the
purpose of meeting losses and
expenses), and

2. The shares of stock in the company
have been recognized by the highest
court in the state in which the company
was organized or by an applicable statute
of that state as constituting or
representing real property or an interest in
real property.
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.

-2-

• The due date (including extensions) of
your tax return for the year in which you
transferred the property given up.
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
qualified 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.
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,

Page 3 of 4

Instructions for Form 8824

10:16 - 6-JAN-2009

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• An exchange in which the related
parties derive no tax advantage from the
shifting of basis between the exchanged
properties, or
• 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.
If, after the exchange, you own
replacement property that a
CAUTION related party sold into the
exchange through an unrelated party
such as a qualified intermediary, you
should not check this box unless you can
establish that tax avoidance was not one
of the principal purposes for the structure
of your transaction. If one of the principal
purposes for the structure of your
transaction was tax avoidance, do not
report the transaction 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).
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
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

-3-

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.
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 2.
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

Page 4 of 4

Instructions for Form 8824

10:16 - 6-JAN-2009

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

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

TIP 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 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).
Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of the
United States. You are required to give us
the information. We need it to ensure that
you are complying with these laws and to
allow us to figure and collect the right
amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating

-4-

to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated burden for
individual taxpayers filing this form is
approved under OMB control number
1545-0074 and is included in the
estimates shown in the instructions for
their individual income tax return. The
estimated burden for all other taxpayers
who file this form is shown below.
Recordkeeping . . . . . .
Learning about
the law or the form . . .
Preparing the form . . .
Copying, assembling,
and sending the form
to the IRS . . . . . . . . . .

. 10 hr., 45 min.
. 2 hr., 17 min.
. 2 hr., 33 min.
. 10 min.

If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you. See
the instructions for the tax return with
which this form is filed.