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Like-kind exchange disposal method

This topic describes the fields that appear in the Disposal tab or Enter Disposal Information window when you choose Like-Kind Exchange as the method of disposal and enter the date on which the asset was disposed.

Special information

Use Sold/scrapped as the disposal method to dispose of a Section 1245 asset as a like-kind exchange for book or state purposes for tax years beginning 2018 and later.
You cannot mass dispose of section 1245 assets using Sold/Scrapped for federal purposes and Like-Kind Exchange for book or state treatment purposes.
To apply separate passenger auto limits when electing out of Reg. 1.168(i)-6, mark the
Apply separate passenger auto limits when electing out of Reg. 1.168(i)-6
 checkbox in the Setup, then Options, then Calculation tab before entering the trade. Note that this setting applies only to trades that are entered after the checkbox is marked.
The application does not automatically handle exchanges involving non-qualifying property; it assumes that all losses are unrecognized.
Like-kind exchange disposal information transfers to the appropriate form in UltraTax CS, if licensed ; however, you may need to enter additional information on Form 8824.
The book gain/loss from a like-kind exchange does not transfer to UltraTax CS .
You cannot dispose of Section 1245 property as a like-kind exchange after 12/31/17.

Fields & buttons

If other property in addition to the like-kind property was given up, enter the fair market value of the other property.
If other property in addition to the like-kind property was given up, enter the adjusted basis of the other property.
Enter the amount of cash paid by the other party.
If property was given up in addition to the like-kind property, enter the fair market value of the property in this field.
Enter the amount of installment obligation received if at least one payment on the note is to be received after the close of the tax year in which the disposition occurred.
Enter any liabilities, including mortgages, that the other party assumes as part of the exchange.
Enter the liability assumed for the like-kind exchange.
Enter the amount of cash paid to the other party in the exchange.
Enter any costs of exchanging the property with the new owner.
Enter the fair market value of any non section 1245 like-kind property received. This includes any non section 1245 property entered in the FMV of like-kind property received. This field should be used only for like-kind exchanges with 1245 property.
Enter the FMV (fair market value) of the like-kind property received from the other party in the exchange.
The application calculates the total amount realized in the exchange and displays it in this field.
To view an on-screen explanation of how the application calculated the total amount realized, select the underlined field label to open the Total Amount Realized window. Select the Print button to print the calculation explanation.
This is the original basis of the asset calculated with depreciation allowed or allowable.
Depreciation allowed is the total depreciation of the asset.
Depreciation allowable is either the depreciation allowed if the asset was 100 percent business use, or the prior depreciation calculated by Fixed Assets CS plus the current depreciation. (To view the calculated amount of prior depreciation for the current asset, select Tasks, then Prior Depreciation Comparison.)
For a partial disposition, enter the adjusted basis calculated with depreciation allowed or allowable for the whole asset before it was divided.
If the property given up was a home, enter any section 121 exclusion amount in this field.
The application calculates the total amount given up in the exchange and displays it in this field.
To view an on-screen explanation of how the application calculated the total amount given up, select the underlined field label to open the Total Amount Given Up window. Select the Print button to print the calculation explanation.
This field displays the recognized gain for the Tax treatment.
To view an on-screen explanation of how the application calculated the gain realized, select the underlined field label to open the Realized Gain window. Select the Print button to print the calculation explanation.
This field displays the recognized gain or realized loss for the Tax treatment.
To view an on-screen explanation of how the application calculated the gain recognized / loss realized, select the underlined field label to open the Realized Gain or Realized Loss window. Select the Print button to print the calculation explanation.
From the dropdown list, select the type of property being disposed of to determine which part of Form 4797 applies.
Information does not print on Form 4797 for assets disposed of through a like-kind exchange.
Mark this checkbox to force the 28 percent rate for the gain or loss for this asset. The amount will appear on Form 4797, Part 1.
Select this button to open a window in which you can enter income classification data when recording an asset disposal for a 990 client.
Select this button to open a window in which you can specify section 1250 information.
Select this button to open a window in which you can view and adjust the asset's Book calculation.
Select this button to open a window in which you can enter related party exchange information, if appropriate.
Replacement asset group box
Enter the date in
MMDDYY
 format.
Enter the date in
MMDDYY
 format.
When an asset is disposed of through a like-kind exchange or through casualty / theft with a replacement asset, the application automatically creates the new asset and enters the next available asset number in this field.
Enter a description of the new asset.
The application displays the Tax treatment's adjusted basis in this field.
The application displays the Book treatment's adjusted basis in this field.
Mark this checkbox to elect to treat the entire basis of the replacement property as a current-year acquisition. When this checkbox is marked, an election statement prints with Form 4562.

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