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Wanna Trade?

IRS goes a little bit easier on like-kind exchanges.

By Joan Szabo

Opinions expressed by Entrepreneur contributors are their own.

There's good news concerning reverse like-kind exchanges.With a like-kind exchange, you trade business property you own forother business property in the same asset class. The result: notaxable gain or loss because the IRS sees the transaction as anontaxable like-kind exchange, in which the tax basis of the oldproperty becomes the tax basis of the new property.

With a reverse like-kind exchange, you acquire the replacementproperty before selling what you plan to give up, which may ease,say, a change in plant location. "Such an exchange would beused if the business owner identified the new property before he orshe was ready to sell the current property," says MarkLuscombe, principal federal tax analyst with CCH Inc., a tax andbusiness law information provider in Riverwoods, Illinois.

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