2.2 Gain Not Recognized (Nontaxable)

1. Like-Kind Exchange

1) "Like-Kind" property defined
Real property held for investment or used for trade or business

2) Boot
(1) Boot: cash, unlike-kind property, C.O.D
(2) Receipt boot
Gain recognized lesser than realized gain or FMV of boot received
* Giving boot: no gain/loss

(3) Basis of property received
= Adjusted basis of the property given up (carryover basis)
 + Gain recognized
 - FMV of boot received
 - Loss recognized
 + Basis of boot given

(4) Holding period of property received

2. Involuntary Conversions

(condemnation, theft, seizure or fire)

1) Replacement property defined: similar or related
2) Time limitation of replacement
Personal use property: two years from year-end
Business property: three years from year-end

3. Homeowner's Exclusion

Sale of Personal Residence ($250,000)

(1) To qualify for the full exclusion: Two years or more during the five-year period

(2) Nonqualified use provision
The exclusion amount is not adjusted, but the portion of the gain attributable to the nonqualified use is not eligible for the exclusion.
Exclusion = period of nonqualified use / total period x gain

(3) Partial (on a prorated basis) exclusion

(4) Multiple-use of exclusion
(5) No age and replacement residence

4. Divorce Property Settlement

5. Installment Sales