Terry exchanges real estate (acquired on August 25,2007)held for investment for other real estate to be held for investment on September 1,2013.None of the realized gain of $10,000 is recognized,and Terry's adjusted basis for the new real estate is a carryover basis of $80,000.Consequently,Terry's holding period for the new real estate begins on August 25,2007.

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This statement is true according to the rules of a like-kind exchange under Section 1031 of the Internal Revenue Code. When property is exchanged for like-kind property, the realized gain is not recognized and the adjusted basis carries over to the new property. The holding period also carries over, starting from the date the original property was acquired.

Terry Exchanges Real Estate (Acquired on August 25,2007)held for Investment