U.S. Individual Income Tax Return Forms

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2024

Instructions for Form 8824

Department of the Treasury
Internal Revenue Service

Like-Kind Exchanges
(and section 1043 conflict-of-interest sales)

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

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

New instructions for completing lines 12a, 15a, and 25a
through 25c on e-filed Forms 8824. Lines 12a, 15a, and 25a
through 25c have been added to e-filed Forms 8824. E-filers no
longer need to attach a separate sheet providing details for those
lines. See Line 12a, Line 15a, and Lines 25a, 25b, and 25c, later.

Expanded examples. We expanded the examples in Figuring
amounts for lines 15 through 20 and Figuring amounts for lines 21
through 24, later.

General Instructions
Reminders

Exchanges limited to real property. For 2018 and later years,
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.
Regulations sections 1.1031(a)-1, 1.1031(a)-3, and 1.1031(k)-1
provide a definition of real property under section 1031, address a
taxpayer's receipt of personal property incidental to the like-kind real
property received, and apply to like-kind exchanges after December
2, 2020. See Definition of Real Property, later, for more details.

Special rules for capital gains invested in qualified opportunity
funds (QOFs). Effective December 22, 2017, section 1400Z-2
provides a temporary deferral of inclusion in gross income for capital
gains invested in QOFs, and permanent exclusion of capital gains
from the sale or exchange of an investment in the QOF if the
investment is held for at least 10 years. See the Form 8949
instructions on how to report your election to defer eligible gains
invested in a QOF.
For additional information (including details on investments in
QOFs held for at least 10 years), see Opportunity Zones Frequently
Asked Questions, at IRS.gov.
Qualified opportunity investment. If you are an eligible taxpayer
who held a qualified investment in a QOF at any time during the year,
you must file your tax return with Form 8997, Initial and Annual
Statement of Qualified Opportunity Fund (QOF) Investments,
attached. See the Form 8997 instructions.

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. Use Part III to figure the amount of gain required
to be reported on the tax return in the current year if cash or property
that isn't of a like kind is involved in the exchange. Also, use Part III to
figure the basis of the like-kind property received.

Oct 18, 2024

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 an 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 Line 7, later, for details.

Like-Kind Exchanges (Form 8824:
Parts I, II, and III)
Section 1031 regulations. Regulations sections 1.1031(a)-1,
1.1031(a)-3, and 1.1031(k)-1 implement statutory changes limiting
the application of section 1031 to exchanges of real property. These
regulations, which apply to like-kind exchanges beginning after
December 2, 2020, provide a definition of real property under
section 1031, and address a taxpayer's receipt of personal property
that is incidental to real property the taxpayer receives in the
exchange.
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 (non-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. See section 1031(a)(2). In addition, section 1031
doesn't 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.

Cat. No. 12597K

Generally, real properties are like-kind properties, regardless of
whether they are improved or unimproved properties.
Property classified as real property under one of the definitions in
the final regulations discussed above may be like-kind to other real
property defined under another definition in the regulations.
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.

section 1031 purposes, regardless of the use or purpose of the
property or whether it contributes to the production of income. In
addition, a structural component is real property for section 1031
purposes if it is a constituent part of, and integrated into, an
inherently permanent structure, regardless of whether the structural
component contributes to the production of income. For example,
items of machinery or equipment are real property for like-kind
exchange purposes if they comprise an inherently permanent
structure, a structural component of an inherently permanent
structure, or are classified as real property under state or local law.

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Definition of Real Property

Regulations section 1.1031(a)-3 defines real property as land and
improvements to land, unsevered natural products of the land, and
water and air space superjacent to land. It is further described as
tangible and intangible real property, as discussed later.

Tangible property. Tangible property is real property for purposes
of section 1031 if it meets any of the following.
• On the date it is transferred in an exchange, the property is
classified as real property under the law of the state or local
jurisdiction in which the property is located. See Regulations section
1.1031(a)-3(a)(6) and Intangible property next.
• The property is specifically listed as real property in Regulations
section 1.1031(a)-3. See Stock that is real property, later.
• The property is considered real property based on all the facts
and circumstances under the various factors provided in Regulations
section 1.1031(a)-3(a)(2). See Property affixed to or integrated into
real property, later.
Each distinct asset is separately analyzed from any other distinct
asset to which it relates for purposes of determining whether the
asset is real property under section 1031. See Regulations section
1.1031(a)-3(a)(4).
Intangible property. Intangible property is real property for
purposes of section 1031 if it meets any of the following, subject to
the exceptions provided in Intangible property that is never real
property under section 1031 next.
• On the date it is transferred in an exchange, the property is
classified as real property under the law of the state or local
jurisdiction in which the property is located.
• It is specifically listed in Regulations section 1.1031(a)-3 as real
property.
• It derives its value from real property or an interest in real property
and is inseparable from that real property or interest in real property
(for example, an easement or an option to acquire real property).
See Regulations section 1.1031(a)-3(a)(5).

Intangible property that is never real property under section
1031. The following assets are exceptions and not real property for
purposes of section 1031, regardless of the classification of the
property under state or local law.
• Stock (other than the type of stock described in Stock that is real
property next), bonds, or notes.
• Other securities or evidences of indebtedness or interest.
• Interests in a partnership (other than an interest in a partnership
that has in effect a valid election under section 761(a) to be excluded
from the application of all of subchapter K).
• Certificates of trust or beneficial interests.
• Choses in action.
Stock that is real property. The following stock is listed in
Regulations section 1.1031(a)-3 as real property for section 1031
purposes.
• Stock in a cooperative housing corporation.
• Shares in a mutual ditch, reservoir, or irrigation company
described in section 501(c)(12)(A) if, at the time of the exchange,
such shares have been recognized by the highest court of the state
in which the company was organized, or by a state statute, as
constituting or representing real property or an interest in real
property.
Property affixed to or integrated into real property. If tangible
property is permanently affixed to real property and will ordinarily
remain affixed for an indefinite period of time, the property is
generally an inherently permanent structure and real property for
2

Deferred Exchanges

A deferred exchange occurs when, based on an agreement, the
property received in the exchange is received after the transfer of the
property given up. For real property associated with 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 your 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#RP-2010-14.
Related parties and agents of the taxpayer aren’t eligible to be QIs,
and are referred to as “disqualified persons.” For more information on
QIs and disqualified persons, see Pub. 544, chapter 1.
The QI exchange constitutes one safe harbor. For more

TIP details on QI exchanges and for a discussion of other safe
harbors, see Pub. 544.

Incidental personal property. For deferred like-kind exchanges
involving a QI, personal property that is incidental to replacement
real property (incidental personal property) is disregarded in
determining whether a taxpayer's rights to receive, pledge, borrow,
or otherwise obtain the benefits of money or non-like-kind property
held by the QI are expressly limited, as provided in Regulations
section 1.1031(k)-1(g)(6) and (7).
Personal property is incidental to real property acquired in an
exchange if:
• In standard commercial transactions, the personal property is
typically transferred together with the real property; and
• The aggregate fair market value (FMV) of the incidental personal
property transferred with the real property doesn’t exceed 15% of the
aggregate FMV of the replacement real property or properties
received in the exchange (15% limitation). See Regulations section
1.1031(k)-1(g)(7).
Exchange with a related party. Special rules limit nonrecognition
for an exchange with a related party. See Line 7, later.

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 is also 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 isn’t 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.

2024 Instructions for Form 8824

Reporting of multi-asset exchanges. If you transferred and
received (a) more than one group of like-kind properties, or (b) cash
or other (non-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 1040); Form 4797, Sales of Business Property; or
Form 6252, Installment Sale Income, whichever applies.

Additional Information

For more information on like-kind exchanges, see section 1031, its
regulations, and Pub. 544.

Specific Instructions
Lines 1 and 2. Generally, only real property should be described on
lines 1 and 2, including intangible property that is treated as real
property for like-kind exchange purposes. Enter the address and
type of property. For property that is treated as real property for
like-kind exchange purposes, but doesn’t have an address, enter a
short description. If the property described on line 1 or line 2 is real
property located outside the United States, indicate the country.

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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#RP-2004-51.

Property Used as Home

If the property given up was owned and used as your main home for
at least a total of 2 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 the following
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.

Report, on line 15a, a description of the other (non-like-kind)
property received. If applicable, total FMV reported on line 25 is
further allocated on lines 25a, 25b, and 25c, based on section 1250,
section 1245, or intangible real property received in the exchange,
respectively.
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/2005-07_IRB#RP-2005-14.

2024 Instructions for Form 8824

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.
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 fax, hand deliver, mail, or otherwise send 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). For more information on related
persons, see Line 7, later. Also, see details on disqualified persons
in Pub. 544.
Note. If you received the replacement property before the end of the
45-day period, you are automatically 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 QI or an EAT, 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. See section 1031(f)(4). Such an
exchange includes the transfer of property you gave up to a QI in
3

exchange for property you received that was formerly owned by a
related party if the related party received cash or other
(non-like-kind) property for the property you received, and you used
the QI 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 party sold into the exchange for cash, or other
CAUTION (non-like-kind) property, through an unrelated party such as
a QI, 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.

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If you met one of the exceptions on line 11, and 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 that
was part of the exchange, the deferred gain or (loss) from line 24
must be reported on your tax return for the year of disposition
(unless an exception on Form 8824, line 11, applies).

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CAUTION

The running of the 2-year holding period will be tolled for any
period during which your risk of loss is substantially
reduced. See Two-year holding period in Pub. 544.

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.
Lines 11a through 11c. The line 11 exceptions are in Form 8824
on lines 11a through 11c. These are the exceptions.
• Line 11a. The disposition was after the death of either party.
• Line 11b. The disposition was an involuntary conversion and the
threat of conversion occurred after the exchange.
• Line 11c. You can establish to the satisfaction of the IRS that
neither the disposition nor the exchange had tax avoidance as one
of its principal purposes.
Line 11c. If you believe that you can establish to the satisfaction
of the IRS that tax avoidance wasn’t 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, 12a, 13, and 14. Lines 12 and 12a 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. On line 12, enter
the FMV of the other (non-like-kind) property that was given up.
Line 12a. On line 12a, enter a description of the other
(non-like-kind) property given up.

Beginning with 2024 Form 8824, e-filers will not attach a
separate sheet to their Form 8824 with the information for
CAUTION lines 12a, 15a, and 25a through 25c. Those lines are now on
their e-filed Form 8824 and should be completed on the form itself.

!

Line 13. On line 13, enter the adjusted basis of the other property
given up.
Line 14. The gain or (loss) from the other property given up is
figured on line 14 and must be reported on your tax return. Report
gain or (loss) as if the exchange were a sale.
Lines 15 and 15a. Include on line 15 the sum of:
• Any cash paid to you by the other party;
• The FMV of other (non-like-kind) property you received, if any;
and
4

• 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 (non-like-kind) property you gave
up.
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 is generally 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 15a. On line 15a, enter a description of the other
(non-like-kind) property received.
Beginning with 2024 Form 8824, e-filers will not attach a
separate sheet to their Form 8824 with the information for
CAUTION lines 12a, 15a, and 25a through 25c. Those lines are now on
their e-filed Form 8824 and should be completed on the form itself.

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Line 18. Include on line 18 the sum of:
• The adjusted basis of the like-kind real property you gave up;
• Exchange expenses, if any (except for expenses used to reduce
the amount reported on line 15); and
• The 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 (non-like-kind) property you gave
up over any liabilities assumed by the other party.
Figuring amounts for lines 15 through 20. See Regulations
section 1.1031(d)-2 and the following example for figuring amounts
to enter on lines 15 through 20.
Example. Taylor owns an apartment building with an FMV of
$220,000, with an adjusted basis of $100,000, and that is subject to
a mortgage of $80,000. Finley owns an apartment building with an
FMV of $250,000, with an adjusted basis of $175,000, and that is
subject to a mortgage of $150,000.
Taylor transfers Taylor’s apartment building to Finley and receives
in exchange Finley's apartment building plus $40,000 cash. Taylor
assumes the mortgage on the apartment building received from
Finley, and Finley assumes the mortgage on the apartment building
received from Taylor.

Summary of Facts
FMV – Real Property
Adjusted Basis
Mortgage
Cash Boot

Taylor Property
$220,000
$100,000
$80,000
$0

Finley Property
$250,000
$175,000
$150,000
$40,000

Taylor files a Form 8824. Taylor enters on line 15 of the Form
8824 only the $40,000 cash received from Finley, and, on line 15a,
enters the description of the other (non-like-kind) property received
as “cash.” The $80,000 of liabilities assumed by Finley isn't included
because it doesn't exceed the $150,000 of liabilities Taylor assumed.
Taylor enters $250,000 on line 16, the FMV of the apartment building
received from Finley. Taylor enters $290,000 on line 17, the sum of
lines 15 and 16. Taylor enters $170,000 on line 18—the $100,000
adjusted basis, plus the $70,000 excess of the liabilities Taylor
assumed over the liabilities assumed by Finley ($150,000 $80,000). Taylor subtracts line 18 from line 17 and enters the

2024 Instructions for Form 8824

$120,000 gain realized on the exchange on line 19. Taylor enters
$40,000 on line 20, the lesser of line 15 or line 19.
Finley files a Form 8824. Finley enters $30,000 on Finley’s Form
8824, line 15—the excess of the $150,000 of liabilities assumed by
Taylor, over the sum of the $80,000 of liabilities assumed from Taylor
and the $40,000 cash Finley paid Taylor ($120,000). On line 15a,
Finley writes “liabilities and cash.” Finley enters $220,000 on line 16,
the FMV of the apartment building received from Taylor. Finley
enters $250,000 on line 17, the sum of lines 15 and 16. Finley enters
on line 18 only the adjusted basis of $175,000, because the total of
the $80,000 of liabilities Finley assumed from Taylor and the $40,000
cash Finley paid Taylor doesn't exceed the $150,000 of liabilities
assumed by Taylor. Finley subtracts line 18 from line 17 and enters
the $75,000 in gain realized on line 19. Finley enters $30,000 on
line 20, the lesser of line 15 or line 19.

section 1245 real property assets have a FMV of $55,000, a cost
basis of $35,000, and an adjusted basis of zero. The section 1245
property is real property for section 1031 like-kind exchange
treatment. The total depreciation allowed or allowable on the section
1245 property is $35,000. All of the property Taylor received from
Finley is section 1250 property. The section 1245(a)(1) ordinary
income recapture amount is $35,000 (the lesser of the property's
depreciable basis of $35,000 or the amount realized of $55,000).

Summary of Facts

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October 21, 2024

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 real 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 (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; and
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 (Form 1040) instructions for your tax
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 Line 7, earlier.
Figuring amounts for lines 21 through 24. See the following
example for figuring the amounts to enter on lines 21 through 24.
Example. In addition to the facts in the example for lines 15
through 20, assume that Taylor previously allocated a portion of the
basis in Taylor’s apartment building for depreciation purposes under
section 168 to assets that are section 1245 property. Applying
section 1.1031(a)-3 of the regulations, Taylor determines that the

2024 Instructions for Form 8824

FMV - Real Property
Adjusted Basis Real
Property
FMV - 1245 Real Property
Basis - 1245 Property
Adjusted Basis - 1245
Property
FMV - 1250 Property
Mortgage Boot
Cash Boot

Taylor Property
$220,000
$100,000

Finley Property
$250,000
$175,000

$55,000
$35,000

$0
$0

$0
$165,000
$80,000
$0

$0
$250,000
$150,000
$40,000

Taylor enters $35,000 on line 21 as ordinary income under the
section 1245(b)(4) recapture rules, the lesser of the $35,000 of
section 1245(a)(1) ordinary income recapture or the Line 20 gain of
$40,000 plus the FMV of non-section 1245 property acquired of
$250,000, which is $290,000. Taylor subtracts line 21 from line 20
and enters $5,000 on line 22. Taylor enters the sum of lines 21 and
22, $40,000, on line 23. Taylor subtracts line 23 from line 19 and
enters the deferred gain on the exchange, $80,000, on line 24.
Alternatively, assume that Taylor's section 1245 assets had a
basis and allowed or allowable depreciation of $50,000 instead of
$35,000. The section 1245(a)(1) ordinary income recapture amount
is $50,000 (the lesser of the property's depreciable basis of $50,000,
or the amount realized of $55,000). Taylor enters the lesser of the
$50,000 section 1245(a)(1) ordinary income recapture, or $290,000
(the gain recognized of $40,000 plus the $250,000 FMV of
non-section 1245 property received) on line 21, as ordinary income
of $50,000. Taylor subtracts line 21 from line 20 and enters $0 on
line 22. Taylor enters the sum of lines 21 and 22, $50,000, on line 23.
Taylor subtracts line 23 from line 19 and enters the deferred gain on
the exchange, $70,000, on line 24.
Section 1245(b)(4) recapture is the lesser of:
1. $50,000 (Section 1245(a)(1) recapture on Taylor’s Property), or
2. $290,000, which is the total of 2a and 2b below
2a. $40,000 (Gain Recognized)
2b. $250,000 (FMV non-section 1245 property received).

Assume that Finley previously allocated $50,000 of the basis in
Finley’s apartment building to section 1250 qualified improvement
property and determines that the section 1250 assets have a fair
market value of $50,000 and adjusted basis of zero. The total
depreciation that would have been allowable on the straight-line
method for the section 1250 property is $15,000, so the excess
$35,000 in depreciation taken over the straight-line depreciation is
Finley’s section 1250(a)(1)(A) recapture amount. Finley computes
the section 1250(d)(4)(A) recapture limit as the greater of the gain
recognized on line 20 of $30,000, and $0 (the section 1250(a)(1)(A)
recapture amount of $35,000 less the FMV of section 1250 property
received of $165,000). Finley enters $30,000 on line 21 as ordinary
income, the lesser of the $35,000 of section 1250(a)(1)(A) recapture
or the section 1250(d)(4)(A) recapture limit of $30,000. Finley
subtracts line 21 from line 20 and enters $0 on line 22. Finley enters
$30,000 on line 23, the sum of lines 21 and 22. Finley subtracts
line 23 from line 19 and enters the deferred gain on the exchange,
$45,000, on line 24.

5

Section 1250 recapture is the lesser of:
1. $35,000 (Section 1250(a)(1)(A) recapture on Finley’s property), or
2. $30,000 (Section 1250(d)(4)(A) recapture limit, which is the greater
of 2a or 2b below).
2a. $30,000 (Gain recognized on the exchange), or
2b. $0: ($35,000 (Section 1250(a)(1)(A) recapture) reduced, but
not below zero, by $165,000 (FMV Section 1250 property
received)).

Beginning with 2024 Form 8824, e-filers will not attach a
separate sheet to their Form 8824 with the information for
CAUTION lines 12a, 15a, and 25a through 25c. Those lines are now on
their e-filed Form 8824 and should be completed on the form itself.
Example. Referring to the facts in the examples for lines 15
through 24, Taylor determines the apartment building received from
Finley contains only like-kind section 1250 property and no section
1245 property and no intangible property treated as section 1031
like-kind property.

Summary of Facts
FMV - 1250 Real Property
FMV - 1245 Real Property
Basis - 1245 Property
Adjusted Basis - 1245
Property
Mortgage Boot
Cash Boot

Taylor Property
$165,000
$55,000
$35,000

Finley Property
$250,000
$0
$0

$0
$80,000
$0

$0
$150,000
$40,000

Taylor subtracts line 15 from the sum of lines 18 and 23 and enters
$170,000 on line 25. Taylor allocates the entire $170,000 to the
basis of the like-kind section 1250 property received in the
exchange. Taylor completes a Form 8824. Taylor reports the
$170,000 on line 25a. See Regulations sections 1.1245-5(a)(1) and
1.1250-3(d)(4).
Like Taylor, Finley also files a Form 8824. Finley determines that
the apartment building received from Taylor with an FMV of
$220,000 contains like-kind section 1245 property with an FMV of
$55,000, and like-kind section 1250 property with an FMV of
$165,000. Finley enters $175,000 on line 25, the sum of lines 18 and
23 less line 15. Finley allocates $131,250 ($165,000/$220,000 ×
$175,000) from line 25 to the basis of the like-kind section 1250
property received in the exchange. Finley allocates $43,750
($55,000/$220,000 × $175,000) from line 25 to the basis of the
like-kind section 1245 property received in the exchange. Finley
reports $131,250 as the amount for line 25a and $43,750 as the
amount for line 25b. As noted in the above example, Finley’s
remaining $5,000 in potential section 1250 depreciation recapture
attaches to the apartment building received by Finley from Taylor,
and $5,000 of any gain recognized on the subsequent sale of this
property is recognized as ordinary income.
6

If you, as an eligible person, 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
during the 60-day period beginning on the date of such sale. (You
must also recognize any ordinary income recapture.) Permitted
property is any obligation of the United States or any diversified
investment fund approved by the OGE. “Eligible persons” includes
an officer or employee of the executive branch, or a judicial officer of
the federal government, but not a special government employee
defined in 18 U.S.C. section 202. “Eligible persons” also includes
any spouse, minor, or dependent child whose ownership of any
property is attributable to such an officer or employee.

TREASURY/IRS
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October 21, 2024

Lines 25, 25a, 25b, and 25c. The amount on line 25 is your basis
in the like-kind property you received in the exchange. Your basis in
other property (non-like-kind) received in the exchange, if any, is its
FMV.
Lines 25a, 25b, and 25c. If you received section 1250 property,
section 1245 property, and/or intangible property that is like-kind
property in the exchange, you must complete line 25a, 25b, and/or
25c, whichever are applicable.
• On line 25a, enter the amount from line 25 that is allocated to the
like-kind section 1250 property received in the exchange.
• On line 25b, enter the amount from line 25 that is allocated to the
like-kind section 1245 property received in the exchange.
• On line 25c, enter the amount from line 25 that is allocated to the
like-kind intangible property received in the exchange.
Amounts entered on lines 25a, 25b, and 25c must be
proportionate to their FMVs.

!

Section 1043 Conflict-of-Interest
Sales (Part IV)

If the property you sold was stock you acquired by exercising

TIP a statutory stock option, you may be treated as meeting the

holding period requirements 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 (Form 1040) 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 tax
return.
3. Report the amount from line 35 on Form 4797, line 10, in
column (g). In column (a), enter “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 (Form 1040). 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,
in column (g). In column (a), write “From Form 8824, line 36.” Don't
complete columns (b) through (f). If you held a qualified investment
in a QOF at any time during the year, you must file your tax return
with Form 8997 attached. See the Form 8997 instructions.
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.

2024 Instructions for Form 8824

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 . . . . . . . . . . .

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.

11 hr., 43 min.

TREASURY/IRS
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October 21, 2024

2024 Instructions for Form 8824

2 hr., 34 min.
2 hr., 53 min.

7