In October 2014, Ben and Jerry exchange investment realty in a § 1031 likekind exchange. Ben bought his real estate in 2004 while Jerry purchased his in 2007. In addition to the realty, Ben receives Pearl, Inc. stock worth $10,000 from Jerry. Ben's realized gain is $30,000. On what date does the holding period for Ben's realty received from Jerry begin? When does the holding period for the stock he receives begin?

Question

In October 2014, Ben and Jerry exchange investment realty in a § 1031 like­kind exchange. Ben bought his real estate in 2004 while Jerry purchased his in 2007. In addition to the realty, Ben receives Pearl, Inc. stock worth $10,000 from Jerry. Ben's realized gain is $30,000. On what date does the holding period for Ben's realty received from Jerry begin? When does the holding period for the stock he receives begin?

Quizplus · Accepted Answer

In a § 1031 like-kind exchange, the holding period for the property received includes the holding period of the property exchanged. Therefore, Ben's holding period for the realty received from Jerry begins in 2004, when he originally acquired his exchanged property. However, the holding period for the stock received begins on the date of the exchange, which is 2014, as it is considered "boot" and does not carry over the holding period.

In October 2014, Ben and Jerry Exchange Investment Realty in a §