Like-Kind Exchanges

2018

Instructions for Form 8824

Department of the Treasury
Internal Revenue Service

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

General Instructions
Future developments. For the latest
information about developments related to
Form 8824 and its instructions, such as
legislation enacted after they were
published, go to IRS.gov/Form8824.

What’s New
Special rules for capital gains invested in
Qualified Opportunity Funds. Effective
December 22, 2017, IRC 1400Z-2 provides a
temporary deferral of inclusion in gross
income for capital gains invested in Qualified
Opportunity Funds, and permanent
exclusion of capital gains from the sale or
exchange of an investment in the Qualified
Opportunity Fund if the investment is held for
at least 10 years. See Form 8949
instructions on how to report your election to
defer eligible gains invested in a Qualified
Opportunity Fund. For additional information,
please see Opportunity Zones Frequently
Asked Questions.
Exchanges Limited to Real Property.
Beginning after December 31, 2017, section
1031 like-kind exchange treatment applies
only to exchanges of real property held for
use in a trade or business or for investment,
other than real property held primarily for
sale. Before the law change, section 1031
also applied to certain exchanges of
personal or intangible property. A transition
rule in the new law provides that section
1031 will still apply to a qualifying exchange
of personal or intangible property if the
taxpayer disposed of the exchanged
property on or before December 31, 2017, or
received replacement property on or before
that date.

Purpose of Form

Use Parts I, II, and III of Form 8824 to report
each exchange of business or investment
real property for real property of a like kind.
Form 8824 figures the amount of gain
deferred as a result of a like-kind exchange.
Part III computes the amount of gain required
to be reported on the tax return in the current
year if cash or property that isn't like kind is
involved in the exchange. Also, the basis of
the like-kind property received is figured on
Form 8824.
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
Aug 02, 2018

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 a
summary on one 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, later, for details.

Like-Kind Exchanges

Generally, if you exchange business or
investment real property solely for business
or investment real 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 isn't recognized.
Section 1031 doesn’t apply to exchanges
of real property held primarily for sale, or
exchanges of personal or intangible
property. See section 1031(a)(2). In addition,
Cat. No. 12597K

section 1031 doesn't apply to certain
exchanges involving tax-exempt use
property subject to a lease. See section
470(e)(4).
If you exchanged stock in a mutual

TIP ditch, reservoir, or irrigation

company, see the discussion later.

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.
Generally, real properties are like-kind
properties, regardless of whether they are
improved or unimproved. However, real
property in the United States and real
property outside the United States aren't
like-kind properties. See Pub. 544, Sales
and Other Dispositions of Assets, for more
details.
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 timing requirements for identification and
receipt of replacement property. The
replacement property for the exchange must
be identified within 45 days after the property
being given up is transferred. The
replacement property must be received
within 180 days, or by the due date of the tax
return including extensions, whichever is
earlier. See the instructions for Line 5 and
Line 6, later, for more details.
If you make a deferred exchange using a
qualified intermediary (QI), the transfer of the
property given up and receipt of like-kind
property is treated as a like-kind exchange. If
you fail to meet the timing requirements
because of the QI, your transaction won't
qualify as a deferred exchange and any gain
may be taxable in the year you transferred
the property. However, if the QI defaults on
its obligation to acquire and transfer
replacement property because of bankruptcy
or receivership proceedings and you meet
certain requirements, you may be able to
report the gain in the year or years payments
are received. For the requirements, see Rev.
Proc. 2010-14, 2010-12 I.R.B. 456, available
at IRS.gov/irb/2010-12_IRB/ar07.html.
Multi-asset exchanges. A multi-asset
exchange involves the transfer and receipt of
more than one group of like-kind properties.
The transfer or receipt of multiple properties
within one like-kind group also is a
multi-asset exchange. However, an
exchange of a single piece of land, a vehicle,
and cash for a single piece of land and a

vehicle is not a multi-asset exchange
because, of the assets transferred, section
1031 may apply only to the exchange of the
land for other land. 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, don't
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 your 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 can't 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
IRS.gov/pub/irs-irbs/irb00-40.pdf. Rev. Proc.
2004-51, 2004-33 I.R.B. 294, is available at
IRS.gov/irb/2004-33_IRB/ar13.html.
Property used as home. If the property
given up was owned and used as your home
for at least a total of two years 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 of gain (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. 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.
Don't 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, and partly for business or investment,

you will need to use two separate Forms
8824 as worksheets. Use one worksheet for
the part of the property used as a home, and
the other worksheet 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. Don't file either
worksheet with Form 8824.
More information. For details, see Rev.
Proc. 2005-14, 2005-7 I.R.B. 528, available
at IRS.gov/irb/2005-7_IRB/ar10.html.
Exchange of stock in a mutual ditch, reservoir, or irrigation company. 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. Generally, only real property
should be described on line 1 or 2. However,
you may describe personal and/or real
property on line 1 or 2 if you are filing this
form to report the disposition of property
exchanged in a previously reported related
party like-kind exchange. 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
identification of the like-kind property you
received in a deferred exchange. To comply
with the 45-day written identification
requirement, the following conditions must
be met.

-2-

1. The like-kind property you receive in
a deferred exchange is 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
describes 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 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 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 identification 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.
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,
estate, or tax-exempt organization. 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.
An exchange structured to avoid the
related party rules isn't a like-kind exchange.
Don't report it on Form 8824. Instead, you
should report the disposition of the property
given up as if the exchange had been a sale.

2018 Instructions for Form 8824

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
IRS.gov/pub/irs-irbs/irb02-49.pdf.
If, after the exchange, you own
replacement property that a related
CAUTION party sold into the exchange through
an unrelated party such as a qualified
intermediary, don't report the transaction on
Form 8824 unless one of the exceptions on
line 11 applies. Instead, report the
disposition of the property given up as if the
exchange had been a sale.

!

If you or the related party (either directly
or indirectly) dispose of property received in
an exchange before the date that is 2 years
after the last transfer which was part of 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. You don't have to complete
Part III.
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 none of
the exceptions on line 11 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.
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 won't 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
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. Line 12 should be
completed if other property that doesn't
qualify as like-kind property was part of the
exchange, 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.

2018 Instructions for Form 8824

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.
See the example in the instructions for
line 18.
Reduce the sum of the above amounts
(but not below zero) by any exchange
expenses you incurred.
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 doesn't 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 isn't included because it
doesn't exceed the $150,000 of liabilities A
assumed. A enters $170,000 on line 18—the
-3-

$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 doesn't 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 sections
1.1252-2(d) and 1.1254-2(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.
Don't 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 isn't
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,
earlier.
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
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 don't 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,
Taxable and Nontaxable Income.
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 your 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. Don't
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.” Don't
complete columns (b) through (f).
Line 36. If you sold a capital asset, enter
any capital gain from line 36 on your
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.” Don't complete
columns (b) through (f).

-4-

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 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 . . . . . . . . . . . .

10 hr., 16 min.
1 hr., 59 min.
2 hr., 14 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.

2018 Instructions for Form 8824