Like-kind exchange disposal method

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

Special information

Enter disposal information (for one asset)

Enter a mass disposition (for multiple assets in a single disposition)

Like-kind exchange tax assumptions

Notes

  • 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 > Options > 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.

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 below. 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, click the underlined field label to open the Total Amount Realized dialog. Click 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, choose Tasks > 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.

Notes

  • This field is available only for the casualty / theft - replacement, casualty / theft - no replacement, and like-kind exchange methods of disposal.
  • You can override the calculated amount by entering a different amount in this field. To remove the override amount and re-enter the application-calculated amount, choose Edit > Delete Override.

If the property given up was a home, enter any section 121 exclusion amount in this field.

Note: This field is available only for 1040 clients.

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, click the underlined field label to open the Total Amount Given Up dialog. Click 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, click the underlined field label to open the Realized Gain dialog. Click 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, click the underlined field label to open the Realized Gain or Realized Loss dialog. Click the Print button to print the calculation explanation.

From the drop-down 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.

Click this button to open a dialog in which you can enter income classification data when recording an asset disposal for a 990 client.

Click this button to open a dialog in which you can specify section 1250 information.

Note: This button is available only for assets with a 25-year or greater MACRS life when casualty / theft - replacement, casualty / theft - no replacement, or like-kind exchange method of disposal is selected.

Click this button to open a dialog in which you can view and adjust the asset's Book calculation.

Note: This button is available only if

  • Casualty / Theft - Replacement, Casualty / Theft - No Replacement, or Like-Kind Exchange is selected in the Method field, and
  • the Follow GAAP calculations for disposals checkbox is marked in the Setup > Treatments > Options dialog for the Book treatment.

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.

Note: This field is available only for the casualty / theft - replacement and like-kind exchange methods of disposal.

Enter a description of the new asset.

Note: This field is available only for the casualty / theft - replacement and like-kind exchange methods of disposal.

The application displays the Tax treatment's adjusted basis in this field.

Note: This field is available only for the casualty / theft - replacement and like-kind exchange methods of disposal.

The application displays the Book treatment's adjusted basis in this field.

Note: This field is available only for the casualty / theft - replacement and like-kind exchange methods of disposal.

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.

Notes

  • This checkbox is automatically marked if you chose Do not follow IRS Notice 2000-4 and Reg 1.168(i)-6 from the Like-kind exchange field in the Setup > Treatments > Treatment Options dialog and the trade took place after 2/27/04.
  • This field is available only for the casualty / theft - replacement and like-kind exchange methods of disposal.

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