Section 1031, Like Kind ExchangesTeresa calls you to discuss her latest tax planning ideasAt a cocktail party last night she was mesmerized by a discussion of like kindexchanges She now feels that like kind exchanges will be the solution to allof her tax problems She just “knows” she should do the followinglike kind exchanges this year:
· Exchange her highly appreciated stock in Apple Computer(FMV $500,000 basis $10,000) for shares of General Motors
· Exchange vacant land in Montana for a shopping mall inIllinois
· Exchange 2005 model year business truck (FMV $15,000 basis$50,000) for a new 2007 model year business truck
· Exchange excess inventory for new computers for thebusiness
· Exchange vacation home in Hawaii for a vacation home inNew York
· Exchange residential rental property in Florida forresidential rental property in Tahiti
· Exchange apartment building in Texas for a residentialrental in Nantucket
Discuss whether each proposed exchange qualifies as a likekind exchange Are there any exchanges that qualify that you would recommendthat Teresa not do? Why? Explain the rules that must be followed to properlyexecute a like kind exchange Explain to Teresa how to properly structure anexchange if the property she wants to dispose of is not desired by the owner ofthe property that she wants to acquire