Terry exchanges real estate (acquired on August 25,2009) held for investment for other real estate to be held for investment on September 1,2015.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 25,2009.

Question

Quizplus · Accepted Answer

This is true according to the rules of Section 1031 of the Internal Revenue Code, which allows for the exchange of property held for investment or business use without immediate recognition of any realized gains. The adjusted basis of the new property is the carryover basis from the old property, and the holding period for the new property begins on the date the old property was acquired.

Terry Exchanges Real Estate (Acquired on August 25,2009) Held for Investment