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Forma 8824 utasítások

Oktatások forma 8824, Like-Kind Exchanges

Rev. 2023

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Department of the Treasury  
Internal Revenue Service  
2023  
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.  
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.  
General Instructions  
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.  
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/  
1. Chief Justice of the United States.  
2. Associate Justices of the Supreme Court.  
3. Judges of the:  
What’s New  
New Line 12a. New line 12a on 2023 Form 8824 requires you to  
report a description of other (non-like-kind) property given up. See  
Line 12a, later.  
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;  
New Line 15a. New line 15a on 2023 Form 8824 requires you to  
report a description of other (non-like-kind) property received. See  
Line 15a, later.  
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  
New Lines 25a, 25b, and 25c. New lines 25a through 25c on 2023  
Form 8824 require you to report the basis allocable to sections 1250  
and 1245, and intangible property treated as real property, if  
applicable. See Lines 25, 25a, 25b, and 25c, later.  
Separate instructions for electronic filers. For e-filers, new lines  
12a, 15a, and 25a through 25c are not available, and all information  
applicable to those lines must be reported on a separate sheet  
attached to their Form 8824.  
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.  
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.  
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.  
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.  
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.  
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.  
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.  
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  
Section 1031 doesn’t apply to exchanges of real property held  
primarily for sale. See section 1031(a)(2). In addition, section 1031  
Jan 5, 2024  
Cat. No. 12597K  
doesn't apply to certain exchanges involving tax-exempt use  
property subject to a lease. See section 470(e)(4).  
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  
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.  
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 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.  
Definition of Real Property  
Deferred Exchanges  
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.  
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 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.  
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  
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.  
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  
On the date it is transferred in an exchange, the property is  
The QI exchange constitutes one safe harbor. For more  
classified as real property under the law of the state or local  
jurisdiction in which the property is located.  
details on QI exchanges and for a discussion of other safe  
harbors, see Pub. 544.  
TIP  
It is specifically listed in Regulations section 1.1031(a)-3 as real  
property.  
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).  
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.  
Personal property is incidental to real property acquired in an  
exchange if:  
Stock (other than the type of stock described in Stock that is real  
In standard commercial transactions, the personal property is  
property next), bonds, or notes.  
typically transferred together with the real property; and  
Other securities or evidences of indebtedness or interest.  
The aggregate fair market value (FMV) of the incidental personal  
Interests in a partnership (other than an interest in a partnership  
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).  
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.  
Exchange with a related party. Special rules limit nonrecognition  
for an exchange with a related party. See Line 7, later.  
Stock that is real property. The following stock is listed in  
Regulations section 1.1031(a)-3 as real property for section 1031  
purposes.  
Multi-Asset Exchanges  
Stock in a cooperative housing corporation.  
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.  
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.  
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2023 Instructions for Form 8824  
         
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.  
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.  
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.  
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/  
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  
Property Used as Home  
distinguishable name (for example, “Mayfair Apartment Building”).  
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.  
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  
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.  
b. All parties to the exchange sign the written agreement  
designating the replacement property.  
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.  
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.  
2. On line 20, enter the smaller of:  
a. Line 15 minus the exclusion, or  
b. Line 19.  
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.  
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.  
Line 6. Enter on line 6 the date you received the like-kind property  
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. E-filers must attach a separate sheet reporting the  
required information for lines 15a, 25a, 25b, and 25c.  
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  
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  
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.  
3
2023 Instructions for Form 8824  
     
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  
exchange for property you received that was formerly owned by a  
related party if the related party received cash or other  
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  
(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  
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.  
If, after the exchange, you own replacement property that a  
Line 15a. On line 15a, enter a description of the other  
related party sold into the exchange for cash, or other  
(non-like-kind) property received.  
!
CAUTION  
(non-like-kind) property, through an unrelated party such as  
E-filers don’t have line 12a, 15a, or 25a through 25c on their  
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.  
Form 8824. E-filers must attach a separate sheet to their  
!
CAUTION  
Form 8824 on which they will report information for those  
lines. They should write at the top of the sheet, their name and  
identifying number as they appear on the Form 8824.  
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).  
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 running of the 2-year holding period will be tolled for any  
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.  
period during which your risk of loss is substantially  
!
CAUTION  
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.  
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.  
Lines 11a through 11c. The line 11 exceptions are in Form 8824  
Line 18. Include on line 18 the sum of:  
on lines 11a through 11c. These are the exceptions.  
The adjusted basis of the like-kind real property you gave up;  
Exchange expenses, if any (except for expenses used to reduce  
Line 11a. The disposition was after the death of either party.  
Line 11b. The disposition was an involuntary conversion and the  
the amount reported on line 15); and  
threat of conversion occurred after the exchange.  
The net amount paid to the other party—the excess, if any, of the  
Line 11c. You can establish to the satisfaction of the IRS that  
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.  
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:  
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 house 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 house 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 house to Finley and receives  
in exchange Finley's apartment house plus $40,000 cash. Taylor  
assumes the mortgage on the apartment house received from  
Finley, and Finley assumes the mortgage on the apartment house  
received from Taylor.  
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.  
Taylor files the Form 8824 on paper. 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. 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 house  
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 -  
E-filers don’t have line 12a, 15a, or 25a through 25c on their  
Form 8824. E-filers must attach a separate sheet to their  
!
CAUTION  
Form 8824 on which they will report information for those  
lines. They should write at the top of the sheet, their name and  
identifying number as they appear on the Form 8824.  
Line 13. On line 13, enter the adjusted basis of the other property  
given up.  
$80,000). Taylor subtracts line 18 from line 17 and enters the  
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2023 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.  
section 1.1031(a)-3 of the regulations, Taylor determines that the  
section 1245 assets are real property for section 1031 like-kind  
exchange treatment. Additionally, Taylor determines that the total  
depreciation allowed or allowable on the section 1245 property is  
$35,000. Taylor determines ordinary income under the section 1245  
depreciation recapture rules by comparing the $35,000 total  
depreciation allowed or allowable on the section 1245 property, to  
the $40,000 gain, plus an allocable portion of the FMV of the section  
1250 property received and enters $35,000 (the smaller amount) on  
line 21. 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.  
Assume that Finley didn’t previously allocate the basis in Finley’s  
apartment house for depreciation purposes under section 168, so  
the apartment house doesn’t contain any like-kind section 1245  
property for section 1031 purposes. Finley enters $0 on line 21 as  
there is no ordinary income from depreciation recapture. Finley  
subtracts line 21 from line 20 and enters $30,000 on line 22. Finley  
enters the sum of line 21 and line 22, $30,000, on line 23. Finley  
subtracts line 23 from line 19 and enters the deferred gain on the  
exchange, $45,000, on line 24.  
Finley files Finley’s Form 8824 on paper. 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 house  
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.  
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  
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.  
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  
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  
2. The larger of:  
a. The gain shown on line 20, if any; or  
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.  
b. The excess, if any, of the gain in item 1 above over the FMV  
Amounts entered on lines 25a, 25b, and 25c must be  
of the section 1250 property received.  
proportionate to their FMVs.  
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:  
E-filers don't have line 12a, 15a, or 25a through 25c on their  
Form 8824. E-filers must attach a separate sheet to their  
!
CAUTION  
Form 8824 on which they will report information for those  
lines. They should write at the top of the sheet, their name and  
identifying number as they appear on the Form 8824.  
1. See section 453(f)(6) to determine the installment sale  
Example. Referring to the facts in the examples for lines 15  
through 24, Taylor determines the apartment house 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. 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. This time, Taylor e-files Form 8824. Taylor will  
attach a separate sheet to the Form 8824 reporting the $170,000 for  
line 25a.  
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 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.  
Like Taylor, this time Finley e-files Finley’s Form 8824. Finley  
determines that the apartment house 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) of 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) to the basis of the like-kind section  
1245 property received in the exchange. Because Finley is filing  
electronically, Finley attaches to Finley’s Form 8824 a separate  
sheet on which Finley reports $131,250 as the amount for line 25a  
and $43,750 as the amount for line 25b.  
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 house for depreciation purposes under  
section 168 to assets that are section 1245 property. Applying  
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2023 Instructions for Form 8824  
 
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).  
Section 1043 Conflict-of-Interest  
Sales (Part IV)  
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.  
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.  
If the property you sold was stock you acquired by exercising  
a statutory stock option, you may be treated as meeting the  
holding period requirements that apply to such stock,  
TIP  
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.  
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.  
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.  
Recordkeeping . . . . . . . . . . . . . .  
Learning about  
the law or the form . . . . . . . . . . .  
11 hr., 43 min.  
2 hr., 34 min.  
2 hr., 53 min.  
Line 30. Enter the amount you received from the sale of the  
Preparing the form . . . . . . . . . . .  
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  
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.  
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.  
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2023 Instructions for Form 8824